Occupational Pension (Company Pension)

The occupational pension (bAV) is a retirement plan that the employer organises for the employee. Since 2002, every employee has had a legal right to salary conversion (Entgeltumwandlung).

Contributions of up to 302 EUR per month (2024) are free of tax and social-security charges. Since 2019, the employer generally has to add a subsidy of at least 15% (where it saves on social-security contributions).

One drawback: full taxes and social-security charges apply during the payout phase. In addition, the lower social-security contributions during the accumulation phase reduce the later statutory pension. The employer subsidy nonetheless makes the bAV attractive for most employees.