Skip to content

Insurance broker / Insurance questions / Company pension (bAV)

Can I pay my Christmas bonus into a company pension in Germany?

In short

Can I pay my Christmas bonus into a company pension in Germany? Yes, through salary conversion (Entgeltumwandlung), as long as you agree it with your employer before the bonus is due. In 2026 up to EUR 4,056 a year stay free of tax and social security, up to EUR 8,112 free of tax. Converting EUR 2,000 often costs you only about EUR 900 to 1,100 in net pay.

Can I pay my Christmas bonus into a company pension in Germany?

What it costs

What reaches the contract in 2026 and how much net pay you give up, tax class I, statutory health insurance, 15 percent employer top-up.

ExampleTypical range
EUR 1,000 of the bonus convertedEUR 1,150 into the contract, net cost about EUR 450 to 600
EUR 2,000 of the bonus convertedEUR 2,300 into the contract, net cost about EUR 900 to 1,100
EUR 4,056 converted, the full charge-free limitabout EUR 4,664 into the contract
EUR 6,000 convertedEUR 4,056 free of all charges, EUR 1,944 free of tax only

Limits under German law and the 2026 social security figures.

The net cost is a guide value from our quoting practice for middle incomes of about EUR 40,000 to

60,000 gross; it depends on your tax rate, children and health insurer.

This is not individual tax advice.

Worked example

Employee, EUR 50,000 gross, EUR 2,000 Christmas bonus

In October she agrees to pay the whole bonus into her direct insurance. She does not convert any other pay.

Christmas bonus grossEUR 2,000
Income tax and solidarity surcharge saved, guide valueabout EUR 600 to 700
Social security saved, about 21 percentabout EUR 420
Employer top-up, 15 percentEUR 300
Paid into the direct insuranceEUR 2,300

She gives up about EUR 900 to 1,000 net and gets EUR 2,300 into the contract. Later she pays tax and usually health and care contributions on the pension.

How the Christmas bonus gets into your pension

With salary conversion you give up part of your future gross pay, and your employer pays that amount into a direct insurance (Direktversicherung), a Pensionskasse or a Pensionsfonds. The law does not limit this to your monthly salary. The Federal Ministry of Finance expressly accepts one-off and special payments such as the Christmas bonus (Weihnachtsgeld), holiday pay or bonuses.

Timing is what matters. The agreement may cover pay you have already earned, but the bonus must not yet be due. If it was already paid out with your November payslip, you can only pay in from net income this year, without the tax and social security advantage.

The 2026 limits

The limits are tied to the contribution ceiling of the statutory pension insurance, EUR 101,400 a year in 2026. They apply to the whole calendar year together. If you already convert part of your monthly pay, only the remainder is left for the bonus.

Limit in 2026Amount per yearWhat stays free
4 percent of the contribution ceilingEUR 4,056income tax and social security
8 percent of the contribution ceilingEUR 8,112income tax only, social security is due
Above thatpossible without limitnothing, paid from taxed income
Example: already converting EUR 200 a monthEUR 2,400 usedEUR 1,656 left free of all charges for the bonus

When it does not work

If your Christmas bonus comes from a collective agreement (Tarifvertrag), you may only convert it if that agreement provides for or permits conversion. Many collective agreements now have their own rules, sometimes with their own pension scheme. Ask your HR department which rule applies to you.

If your employer has no company pension in place, you can still demand salary conversion. If the employer does not offer a Pensionskasse or Pensionsfonds, you can ask it to take out a direct insurance for you.

The downsides, honestly

What is free of charges today is taxed later. The company pension is fully taxable when paid, and health and long-term care contributions are usually due on it. Because you pay less into the statutory pension, your state pension also drops a little.

The money is locked in until retirement. If you are likely to leave Germany soon, check first what happens to the contract abroad. Conversion makes most sense when your employer pays the top-up and your tax rate today is higher than it will be in retirement.

Step by step

  1. Check your employment contract or collective agreement to see where the bonus comes from.
  2. Ask HR which pension provider is used and whether the 15 percent top-up is paid.
  3. Work out how much of the EUR 4,056 limit your monthly conversion already uses.
  4. Sign the conversion agreement before the bonus is processed in payroll.
  5. Check your December payslip to confirm the amount was deducted free of tax and social security.

Checklist

  • Agreement signed before the bonus is due
  • Collective agreement rule checked
  • All conversions for the year added up
  • 15 percent top-up named in the agreement
  • Costs and guarantee of the contract known
  • Plans to leave Germany considered

Common mistakes

  • Asking only after the payout, when this year's advantage is gone
  • Forgetting monthly conversion and going over the EUR 4,056 limit
  • Ignoring the later tax and health insurance contributions on the pension
  • Accepting an expensive contract just because it is the one offered at work

Questions and answers

Frequently asked

Can I also convert holiday pay or a performance bonus?

Yes, the same applies to all one-off payments: the agreement must come before the payment is due,

and the annual limits apply to everything together.

Does my employer have to agree?

You have a legal right to convert up to 4 percent of the contribution ceiling.

Your employer chooses the provider,

and for pay under a collective agreement it is bound by that agreement.

Do I get the employer top-up on the Christmas bonus too?

Yes, as far as your employer saves social security through the conversion.

If your pay is above the contribution ceilings, the top-up may be lower.

What happens if I change jobs?

Entitlements from salary conversion are yours immediately.

You can take the contract with you or make it paid-up.

Is it worth it on a low income?

Less so.

With a low tax rate the saving today is small, while the deductions on the later pension remain.

Check whether your employer pays something extra on top.

Can I decide again every year?

That depends on your agreement.

Many employers allow conversion for a specific year only, so ask how to opt in again next autumn.

Sources

NAMMERT insurance broker

Request a quote: Company pension (bAV)

We compare insurers and come back to you, in English.

Free; the insurer pays our fee.

1Who is it for?
2Which insurance?

Choose as many as you like. For each one, the details an insurer needs for a quote appear below.

Personal

Business

3Details

Company pension schemes in Germany (bAV)

For example English-language admin, staff from abroad, director's pension, reviewing old contracts

4Your current policy
5How can we reach you?

Free of charge and without obligation. A person will get back to you.

Related questions

Updated

Was this useful?