Company Pension (bAV)
Betriebliche Altersvorsorge (bAV, company pension) is a pension contract your employer sets up; part of your gross salary goes into it before tax. In 2026, up to €338 a month is free of tax and social contributions, and up to €676 is free of tax. The mandatory employer top-up is 15% of your contribution, but no more than what the employer saves on social contributions. Your net pay drops by about half the contribution, and the money is available no earlier than age 62 (for contracts from 2012 on).
How safe is the money in a bAV?
The law protects a bAV against the insolvency of your employer or the insurer: the employer guarantees the pension, and behind the employer stand two funds, PSVaG (for pensions) and Protektor (for life insurers). The weak spot is the tax and contribution rules on payouts: Germany has already changed them for existing contracts.
If the pension system in your home country lost its value, 40 years without access to your money can look like a repeat. A Direktversicherung (direct insurance), Pensionskasse (insurance-like pension fund) or Pensionsfonds (pension fund that may invest in markets) holds the money outside the employer's assets. With a Direktzusage (direct pension promise) or Unterstützungskasse (support fund), the employer itself or its fund holds it.
| What can happen | What the law provides |
|---|---|
| Employer insolvency | PSVaG pays for Direktzusage, Unterstützungskasse, Pensionsfonds and most Pensionskassen [9] |
| Insurer insolvency | Contracts move to Protektor; guaranteed benefits can be cut by at most 5% [10] |
| A Pensionskasse cuts payouts | The employer pays the difference: it is liable for the promised pension (Einstandspflicht, duty to make good, § 1 BetrAVG). Since 2022, PSVaG pays if the employer is insolvent [3][9] |
| Contract under the Sozialpartnermodell (collective-agreement model) | Guaranteeing the pension amount is prohibited; Einstandspflicht and PSVaG don't apply [3] |
| Rule changes | Since 2004, bAV payouts, including those from old contracts, carry the full health insurance contribution; since 2020, the first €197.75 a month (2026) is exempt: this is the Freibetrag (allowance) [6][11] |
How can you tell whether a bAV pays off for you?
Compare how much goes into the plan for each euro of net pay and how much of the payout reaches you. With a gross salary of €50,000 and a 15% top-up, €107 of net pay puts €230 into the plan, about €2.15 per €1 (tax class I, 2026). Finanztip estimates that a Direktversicherung can pay off with an employer top-up of about 20% [12].
Deductions from bAV payouts (2026):
- income tax on the full amount [2];
- health insurance of about 17.5% on the amount above the €197.75 monthly Freibetrag, if you are in the KVdR (compulsory health insurance for pensioners);
- Pflegeversicherung (long-term care insurance) of 3.6–4.2% on the full amount, if it exceeds €197.75 [6][7].
If your gross salary is below €69,750 a year (the health insurance contribution ceiling, 2026), you save about 21% of the contribution in social contributions. In retirement in the GKV (statutory health insurance), you pay roughly the same 21% of the payout above the Freibetrag. Above €69,750 gross, the saving is about 10.6%, while the contributions in retirement stay the same. In the PKV (private health insurance), you pay no contributions on bAV in retirement.
How much can you pay in free of tax and contributions in 2026?
Up to €676 a month (€8,112 a year) free of tax and up to €338 a month (€4,056 a year) free of social contributions. These are 8% and 4% of the BBG (Beitragsbemessungsgrenze, contribution ceiling) of the statutory pension insurance: €101,400 a year in 2026 [1][2].
By law, you are entitled to put up to 4% of the BBG into bAV: this is Entgeltumwandlung (salary conversion). More is possible with the employer's consent [5]. The 8% limit covers your contributions and the employer's money together (§ 3 Nr. 63 EStG).
How much does your take-home pay drop?
By about half the contribution. A contribution of €200 a month cuts net pay by €106–110 in tax class I (gross €50,000–110,000 a year, 2026). In class III, it falls by €118–133; in class V, by €89–106.
| Gross per year | Net without bAV | Net with €200 bAV | Difference | Mandatory top-up |
|---|---|---|---|---|
| €50,000 | €2,695 | €2,588 | €107 | €30 |
| €75,000 | €3,779 | €3,669 | €110 | about €21 |
| €110,000 | €5,270 | €5,164 | €106 | €0 |
Tax class I, no children, no church tax, Zusatzbeitrag (health insurer's additional contribution) 2.9%. Calculated with the model behind the gross-to-net calculator, BMF 2026 algorithm.
Each year of €200 monthly contributions lowers your future state pension by €1.96 a month (2026 values) if your gross is below the BBG [1][8]. Benefits calculated from gross pay drop too: ALG I (Arbeitslosengeld I, unemployment benefit), Krankengeld (sick pay) and Elterngeld (parental allowance) [13].
When must the employer add 15%?
The employer must add 15% when you convert part of your salary into a Direktversicherung, Pensionskasse or Pensionsfonds and the employer saves social contributions as a result (§ 1a Abs. 1a BetrAVG). The top-up is capped at that saving. Since 2022, the rule also covers old contracts; for a Direktzusage or Unterstützungskasse there is no mandatory top-up [3]. An employer top-up above the legal minimum is voluntary: the contract sets its size and cap.
The top-up is below 15% or zero if:
- your gross is above €101,400 (BBG 2026): the employer saves nothing;
- your gross is between €69,750 and €101,400: the employer saves about 10.6% and may pay that amount instead of 15%;
- your contribution is above €338 a month: there is no saving on that part;
- a Tarifvertrag (collective agreement) sets its own rules.
What happens to your bAV when you change jobs?
Your contributions and the mandatory 15% belong to you from day one (§ 1b Abs. 5 BetrAVG); documents call this Unverfallbarkeit (vesting). The employer's voluntary money vests once you are 21 and 3 years have passed since the employer's pension promise (Zusage), unless the contract offers better terms [3].
| Option | How it works |
|---|---|
| Leave it paid-up (beitragsfrei) | The contract waits for retirement; management fees keep running |
| Keep paying in yourself | From net pay, without the tax break or the top-up |
| Move it to the new employer | You have a right to transfer within one year of leaving if the value is up to €101,400 (2026) and the plan is neither a Direktzusage nor an Unterstützungskasse (§ 4 BetrAVG); the new employer picks the provider |
| Lump sum instead of a pension (Abfindung) | The employer may pay it out without your consent if the pension is up to €59.33 a month or the capital up to €7,119 (2026), but not after you have requested a transfer [4] |
Changing jobs often raises costs: the provider deducts Abschlusskosten (acquisition costs) in the first years, and with each new contract you pay them again.
What happens to your bAV if you leave Germany?
The contract stays in Germany, and the provider pays the pension to any country, but not before age 62 (for contracts from 2012 on) [14]. Before that, you can get the money in two cases. The employer may pay out a small bAV below the Abfindung threshold on its own. After a Beitragserstattung (refund of your state pension contributions), you can demand a payout of the whole bAV, with no cap on the amount (§ 3 Abs. 3 BetrAVG) [3].
A Beitragserstattung is possible only if you move outside the EU, the EEA and Switzerland, and not for everyone. So after such a move, the lock on the money is softer than it looks; within the EU, the EEA and Switzerland, the money waits for retirement age.
Does bAV count toward your savings rate?
No. Geldchen calculates the savings rate from take-home pay and counts only what you set aside from net pay yourself: savings deposits and investments. bAV is tracked separately, as pension savings: the money is out of reach until retirement, and part of the contribution (tax, social contributions and the employer's top-up) was never in your hands.
Example for a gross salary of €50,000 a year (2026): a €200 monthly bAV contribution lowers net pay from €2,695 to €2,588. If you also put €150 into a Sparplan (regular investment plan), your savings rate is €150 / €2,588 = 5.8%. The bAV contribution goes on a separate line. In the savings checklist, Geldchen uses 10% of net pay a month as a benchmark; this is an editorial guideline, not a law.
bAV does not replace an emergency fund or money for goals in the next 3 years: until retirement, it is illiquid money. In the Boat phase (the first 24 months after moving), while you have no emergency fund yet, every euro in bAV is a euro not in reserve.
What did BRSG II change in 2026?
BRSG II (Zweites Betriebsrentenstärkungsgesetz, the second act to strengthen company pensions) mostly applies from 22 January 2026 [4]. The Abfindung threshold for a payout without your consent rose from €39.55 to €59.33 a month (capital up to €7,119). Since 22 January 2026, an employer without a collective agreement can enrol staff in bAV automatically (opting-out, § 20 BetrAVG) through a Betriebsvereinbarung (agreement with the works council): with a top-up of at least 20% and a right to opt out.
Who can answer your bAV questions?
It depends on the question:
- assessing your employer's offer and comparing it with ETFs: a Honorarberater (fee-only adviser) or the Verbraucherzentrale (consumer advice centre);
- leaving Germany, a lump-sum payout, tax on payouts abroad and the DBA (double taxation agreement): a Steuerberater (tax adviser);
- a refund of state pension contributions: DRV (Deutsche Rentenversicherung) advice;
- a dispute over the top-up: the Betriebsrat (works council) or a Fachanwalt für Arbeitsrecht (employment lawyer).
FAQ
This is not legal or financial advice.
Does it make sense to start a bAV during the Probezeit (probation period)?
Probation can only cost you the employer's voluntary top-up: your contributions and the mandatory 15% belong to you from day one. The price of a short contract is the Abschlusskosten of the first years.
Take the bAV as a monthly pension or as a lump sum?
A lump sum from a Direktversicherung, Pensionskasse or Pensionsfonds is taxed in full in the year of payout: the whole capital is added to that year's income and pushes up the tax rate. Health insurance contributions on it are calculated as if it were spread over 120 months. A pension spreads the tax over the years.
Can you choose a different provider if the costs are high?
No: the employer chooses the type of bAV and the provider. You decide whether to take part and how much to convert, by law up to €338 a month. Compare the top-up with the contract's costs over the full term.
Sources
- Bundesministerium für Arbeit und Soziales — Sozialversicherungs-Rechengrößenverordnung 2026 (2026), https://www.bmas.de/DE/Service/Gesetze-und-Gesetzesvorhaben/sozialversicherungs-rechengroessenverordnung-2026.html
- Bundesministerium der Justiz — Einkommensteuergesetz, § 3 Nr. 63 and § 22 Nr. 5 (2026), https://www.gesetze-im-internet.de/estg/__3.html
- Bundesministerium der Justiz — Betriebsrentengesetz (BetrAVG), §§ 1, 1a, 1b, 3, 4 (2026), https://www.gesetze-im-internet.de/betravg/
- Bundesgesetzblatt — Zweites Betriebsrentenstärkungsgesetz, BGBl. 2026 I Nr. 14 (2026), https://www.recht.bund.de/bgbl/1/2026/14/regelungstext.pdf
- Bundesministerium für Arbeit und Soziales — Entgeltumwandlung (2026), https://www.bmas.de/DE/Soziales/Rente-und-Altersvorsorge/Betriebliche-Altersversorgung/Entgeltumwandlung/entgeltumwandlung.html
- Bundesministerium der Justiz — SGB V, § 226 and § 229 (2026), https://www.gesetze-im-internet.de/sgb_5/__226.html
- Bundesministerium für Gesundheit — Beiträge der GKV (2026), https://www.bundesgesundheitsministerium.de/beitraege
- Deutsche Rentenversicherung — Rentenanpassung 2026 (2026), https://www.deutsche-rentenversicherung.de/DRV/DE/Ueber-uns-und-Presse/Presse/Meldungen/2026/260305-rentenanpassung-2026.html
- Pensions-Sicherungs-Verein — Insolvenzsicherungspflicht von Pensionskassenzusagen (2026), https://www.psvag.de/mitglieder-beitrag/insolvenzsicherungspflicht-von-pensionskassenzusagen/
- BaFin — Sicherungseinrichtungen der Lebens- und Krankenversicherer (2026), https://www.bafin.de/DE/verbraucherinnen-verbraucher/themen-finanzprodukte/versicherungen/schieflage-von-versicherern/sicherungseinrichtungen-versicherer/sicherungseinrichtungen-versicherer_node.html
- Deutscher Bundestag, Wissenschaftliche Dienste — Doppelverbeitragung von Betriebsrenten, WD 9-061-16 (2016), https://www.bundestag.de/resource/blob/487678/dc721b2eab55122034a6a8efae2f2067/wd-9-061-16-pdf-data.pdf
- Finanztip — Betriebliche Altersvorsorge: wann lohnt die Betriebsrente (2026), https://www.finanztip.de/betriebliche-altersvorsorge/
- Finanztip — Entgeltumwandlung (2026), https://www.finanztip.de/betriebliche-altersvorsorge/entgeltumwandlung/
- Bundesministerium der Finanzen — BMF letter of 12 August 2021, Steuerliche Förderung der betrieblichen Altersversorgung, para. 3 (minimum payout age 62 for pension promises from 2012); Amtliches Lohnsteuer-Handbuch 2024, Anhang 2 III, https://esth.bundesfinanzministerium.de/lsth/2024/B-Anhaenge/Anhang-02-Druck/III/anhang-2-III.html