# Company pensions in Germany: what employers must offer and what staff should know > In Germany every employee can demand to convert part of their salary into a company pension, and the employer usually has to add 15%. For international teams the scheme works differently from a UK workplace pension or a US 401(k): there is no auto-enrolment by law, and the employer stays liable for what was promised. Quelle/Source: https://www.nammert.com/en/insurance-broker-company-pension.php Updated: 2026-09-18 ## Do German employers have to offer a company pension? Yes, on request. Under section 1a of the Company Pensions Act (BetrAVG), every employee in the statutory pension scheme may convert up to 4% of the contribution ceiling, €4,056 in 2026, into a company pension. If the employer has no scheme, the employee can insist on a direct insurance policy. The employer must add a flat 15% of the converted salary for direct insurance, pension funds and Pensionskassen, to the extent it saves social security contributions. ## At a glance - **Mandatory?:** Employees have a legal right to salary conversion - **Tax-free 2026:** up to €8,112 a year (8% of the ceiling) - **Free of social security 2026:** up to €4,056 a year (4% of the ceiling) - **Employer top-up:** 15% of converted salary, where social security is saved - **Contribution ceiling 2026:** €101,400 a year, €8,450 a month - **Vesting:** salary conversion vests immediately, employer money after 3 years (age 21 or older) ## How it differs from a UK workplace pension or a 401(k) There is no statutory auto-enrolment in Germany. Staff must actively ask for salary conversion, unless the employer runs an opt-out model under a collective agreement or, since 2026, under a works agreement. Contributions are tax-free up to €8,112 in 2026 and free of social security up to €4,056. The bigger difference is liability. German law treats a company pension as a promise by the employer. If an insurer or Pensionskasse pays less than promised, the employer must make up the difference. Only the 'social partner model', which requires a collective agreement, is a pure defined-contribution plan without guarantee. Pension payouts are fully taxed later and, for members of statutory health insurance, subject to health and care contributions above an allowance of €197.75 a month in 2026. For most employees the scheme is still worth it, especially with the employer top-up. We advise on the insurance routes, not on individual funds. ## International staff: moving jobs and leaving Germany Contracts from salary conversion belong to the employee from day one. When changing jobs within Germany, the employee can transfer the value to the new employer within one year (section 4 BetrAVG) or keep the contract, either paid-up or continued privately. When leaving Germany, the pension usually stays in the German contract until retirement and is then paid abroad, taxed under the relevant double tax treaty. A cash-out is generally not possible, only very small entitlements may be settled. Employees from outside the EU should know this before converting large amounts. ## What changed in 2026 The Second Company Pensions Strengthening Act has been in force since 22 January 2026, some parts from 2027. Employers without a collective agreement may now introduce automatic enrolment with an opt-out through a works agreement, if no pay agreements exist or are customary in their sector and they add a 20% top-up. The social partner model is also opened to employers outside collective bargaining. For low earners, employers can claim back 30% of an additional employer-paid contribution through payroll tax (section 100 EStG). In 2026 this applies to monthly pay up to €2,575, with a maximum of €288 a year. From 2027 the maximum rises to €360 and the income limit is linked to the contribution ceiling. ## What is covered - Lifelong company pension or lump sum, depending on the scheme rules - Survivor's pension for spouse and children, if agreed - Disability pension as an add-on, if included - Transfer to a new German employer within one year of leaving - Immediate vesting of salary conversion - Insolvency protection through the PSVaG for direct promises, support funds and pension funds - Paid-up status during parental leave or long illness - Payment of the pension to a foreign account after retirement ## What is not covered - No release of employer liability, except in the social partner model - No guaranteed return on fund-linked plans - No cash-out before retirement, apart from very small entitlements - No exemption from health insurance contributions in retirement - No statutory auto-enrolment outside opt-out schemes ## Who needs it - Every employer with staff, because the legal right applies from the first employee - Companies recruiting international talent who compare benefits packages - Employers with old contracts where the 15% top-up was never checked - Managing shareholders who want a pension through their company - Employees planning to stay in Germany until retirement ## Who can do without - Employees on short assignments who will leave Germany soon and need access to the money ## What it costs For the employer, the cost is the top-up, administration and, for some routes, insolvency insurance contributions. Against this stand saved social security contributions, which are usually higher than the 15% top-up. For employees, the net cost is what matters: a €100 contribution often costs well under €100 net, depending on tax class and income. **What drives the premium:** - Funding route and type of promise - Employer contribution above the legal minimum - Number of employees and participation rate - Plan costs, usually lower under a group framework contract - HR and payroll workload - Insolvency insurance contributions for internal routes and pension funds _No fixed benchmarks, as contributions depend on salary and scheme rules. Tax and social security limits as of 2026. Costs and benefits are fixed only in the quote._ ## The policy levels on the market - **Salary conversion only:** Employees convert salary, the employer pays the legal 15% top-up. Meets the law, rarely convinces anyone. - **Enhanced employer contribution:** The employer adds, for example, 20% to 50% or a fixed monthly amount. A strong retention tool for international hires. - **Company pension plan with written rules:** One concept for all staff, with a pension regulation, a single provider, a group contract and digital administration. The standard for firms with around ten or more employees. ## How to recognise a good policy | Criterion | Minimum standard | Strong policy | Why it matters | | --- | --- | --- | --- | | Type of promise | defined contribution with minimum benefit | clearly documented in a written pension regulation | The type of promise decides what the employer is liable for. | | Plan costs | group contract with reduced acquisition costs | effective costs below 1% a year | High early costs reduce the value the employer stands behind. | | Portability | transfer under section 4 BetrAVG | insurer has joined the industry transfer agreement | New hires bring contracts, leavers take them along. | | English-language service | German documents only | English information and online portal | Staff only value a benefit they understand. | | Administration | paper-based | digital portal linked to payroll | HR time is often the real cost. | | Contribution holiday | paid-up status | restart without new costs after parental leave or illness | Career breaks should not penalise the employee. | | Add-ons | retirement benefit only | disability and survivor cover with simplified health questions | Group schemes can insure people who would struggle to get individual cover. | ## Insurers on the German market Company pensions are provided by life insurers, Pensionskassen and pension funds, usually under group framework contracts with lower costs than individual policies. This list is a market overview and says nothing about which providers we work with. - **Allianz**: direct insurance; the group also runs its own Pensionskasse and pension fund - **Alte Leipziger**: mutual insurer with its own Pensionskasse and pension fund, broker channel - **R+V Pensionsfonds**: pension fund of the cooperative R+V group - **Swiss Life**: part of the Swiss Life group, also runs a Pensionskasse and pension fund in Germany - **HDI**: part of the Talanx group, focus on corporate clients - **Stuttgarter**: mutual insurer, broker channel - **WWK**: mutual insurer with its own pension fund - **NÜRNBERGER**: group includes a Pensionskasse, agents and brokers 229 insurers supervised by BaFin, the German regulator, are licensed for this class of insurance. (Lebensversicherer, Pensionskassen und Pensionsfonds). Source: BaFin company database, retrieved 2026-09-18. Insurers from other EU countries selling through a branch or without a German office are not included. ## Typical claims and who pays - **Leaving Germany and wanting cash** (no loss, but money stays locked): Salary conversion contracts cannot simply be cashed out, apart from very small entitlements and a few special cases. The pension is paid abroad from retirement age. - **Employee unable to work at 45** (the missing contributions until retirement): Without disability cover the contract is frozen and the pension shrinks. With it, the insurer keeps paying the contributions or pays a pension. - **Death before retirement** (the accumulated capital): Basic plans pay the balance to a spouse or children. Strong ones add extra survivors' cover. - **Employer goes bankrupt** (no loss if set up properly): Direct insurance belongs to the employee. Other routes are protected by the German pension guarantee fund, PSVaG. - **Stock crash shortly before retirement** (part of the fund value): Contribution plans with minimum benefit guarantee what was paid in minus risk costs. Good plans shift into safer assets before retirement. - **New job, different pension provider** (no loss if handled in time): Within one year of leaving you can ask to transfer the value, or keep the old contract. ## Myth or truth - „Salary conversion can slightly lower your future German state pension." ✔ True. Converted salary is free of pension contributions, so you earn fewer state pension points. The company pension usually more than makes up for it. - „Taking a lump sum avoids health insurance contributions in retirement." ✘ Not for statutory members. The lump sum is spread over ten years and contributions are charged on each monthly portion. - „Germany has a fund that protects company pensions if the employer goes bust." ✔ Yes. Employers with direct promises or support funds pay into the Pensions-Sicherungs-Verein, which steps in on insolvency. - „The employer's 15% top-up is paid on top of your conversion." ✔ Correct. It is an extra contribution, not a deduction from your salary conversion. - „You lose employer-funded pension rights if you leave within five years." ✘ Not anymore. Since 2018, rights vest after three years of the promise and from age 21. Rights from your own salary conversion are yours from day one. ## Common mistakes - Assuming staff are auto-enrolled as in the UK - Not paying the 15% top-up on older contracts - Having no written pension regulation - Not documenting advice to employees who decline - Taking over contracts brought by new hires without checking them - Letting short-term expats convert large sums they cannot access later ## FAQ ### How much can go into a German company pension tax-free in 2026? Up to €8,112 a year, which is 8% of the €101,400 contribution ceiling. Of that, only €4,056 is also free of social security. The limit applies jointly to direct insurance, Pensionskasse and pension fund. ### Can I cash out my German company pension when I leave the country? Generally no. The pension stays in the contract and is paid out at retirement, also abroad. Only very small entitlements may be settled with a lump sum, and that is the employer's decision, not the employee's. ### Does the employer have to pay the 15% top-up for high earners? Not if salary is above the pension contribution ceiling, because the employer then saves no social security. The top-up is tied to actual savings. Collective agreements may set different rules. ### What happens to my company pension when I change jobs in Germany? Salary conversion vests immediately. You can keep the contract paid-up, continue it privately or, within one year, transfer its value to your new employer. Employer-funded parts vest after three years if you are at least 21. ### Is a company pension taxed when it is paid out? Yes, fully as income, because contributions were tax-free. Members of statutory health insurance also pay health and care contributions on it above an allowance of €197.75 a month in 2026. ### Is the employer liable if the pension provider cuts benefits? Yes. Under section 1 BetrAVG the employer must make up any shortfall against the promised benefit. The exception is the social partner model, where only the contribution is owed. ### Can we offer an opt-out scheme without a collective agreement? Since the 2026 reform, yes, through a works agreement, if no pay agreements exist or are customary in your sector and you add a 20% employer top-up. Employees are enrolled automatically and may decline. ### Which route suits a small startup with an international team? Usually direct insurance under a group framework contract: little admin, no insolvency insurance contributions and easy transfer when people move on. English-language information for staff is worth asking for. ### Are there subsidies for low earners? Yes. Employers can reclaim 30% of an additional contribution for staff earning up to €2,575 a month in 2026, up to €288 a year per person. From 2027 the maximum rises to €360. ## Legal basis and sources - [Company Pensions Act (BetrAVG, German)](https://www.gesetze-im-internet.de/betravg/) - [Income Tax Act (EStG, German)](https://www.gesetze-im-internet.de/estg/) - [Insurance Contract Act (VVG, German)](https://www.gesetze-im-internet.de/vvg_2008/) - [BaFin company database (licensed insurers)](https://portal.mvp.bafin.de/database/InstInfo/) ## Request quotes We obtain quotes and come back with a comparison. Free of charge and without obligation: the insurer pays our commission. You can write in English. https://www.nammert.com/en/insurance-broker-company-pension.php#anfrage --- NAMMERT Assekuradeur GmbH, insurance broker licensed under section 34d(1) of the German Trade Regulation Act, broker register no. D-C08Q-TOSD4-37. For boat and yacht insurance we act as underwriting agency, not as broker. NAMMERT Assekuradeur GmbH, Karl-Marx-Straße 4, 15711 Königs Wusterhausen, +49 3375 29 12 77, info@nammert.com. Wikidata: Q141141479.