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Save for old age
and save taxes with the Rürup pension
Büro

With a company pension scheme (bAV) - or company pension - you build up an additional pension through your employer.

Every employee is legally entitled to invest part of their gross salary in a company pension plan for the period of retirement. The pension provision is financed directly by the employer or through deferred compensation by the employee.

Advantages of company pension schemes:

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  • Attractive state support for your pension

  • Improved supply situation in retirement age

  • Securing pensions and living standards

  • Free of charge when receiving citizen's money

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The most important things about company pension schemes in brief:

  • The company pension scheme (bAV) enables the subsidized creation of a supplementary pension via the employer.

  • The company pension can be financed by the employer or by you (employee) by giving up part of your gross earnings in favor of the pension. As a rule, pension contributions are made jointly by employers and employees.

  • No matter who spends the contributions on retirement provision, you pay less in taxes and social security contributions.

  • Contributions to company pension schemes are tax-free and, to a certain extent, exempt from social security contributions during the savings phase. The later pension must be fully taxed. Those with statutory health insurance also have to pay contributions to health and nursing care insurance.

What is the company pension plan?


With the company pension scheme (bAV) - or company pension - you build up an additional pension through your employer. If the employer does not offer this as a benefit in addition to the salary, employees usually have the option of so-called deferred compensation. This means that the employer passes on the pension contributions from your gross earnings to the selected pension provider. Taxes and social security contributions are calculated and paid from the reduced salary. This means there are fewer taxes and social security contributions. This is how the state supports you with your retirement planning.

There are five different implementation options to choose from:

  • Direct insurance

  • Pension box

  • Pension fund

  • Support fund

  • Direct commitment

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The first three implementation methods mentioned are also referred to as the insurance-type implementation methods. We will come across this term below. Basically, the employer chooses which implementation method he offers in his company. As part of the legal right to deferred compensation, employees have the right to request direct insurance if the employer does not offer a pension fund or pension fund.

This is what a company pension plan provides


The primary purpose of the company pension scheme (bAV) is to secure the standard of living in old age and to supplement the statutory pension payments. In addition, the following protection is possible through the company pension plan:

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  • Company pension benefits in the event of occupational disability

  • Protection for surviving dependents through company pension schemes.

  • Surviving dependents are spouses, former spouses, children entitled to child benefit, life partners and named partners living in the same household

  • The company pension scheme is generally paid as a pension, but depending on the benefit case, it can also be made as a one-off lump sum payment

Is there a company pension scheme for self-employed people and entrepreneurs?


First of all, this is about the BAV, which is supported by tax and social security law. Freelancers and traders cannot set up a company pension scheme (bAV) for themselves. If there is a fixed, long-term contractual relationship, a company pension plan can be set up via the client in individual cases. Partnership partners also cannot receive a company pension plan. (Co-)owners of a corporation can generally receive a company pension plan if they work in the company. For example, shareholder-managing director. It is even common for shareholders-managing directors and board members of a corporation to set up a company pension scheme.

Is there a company pension scheme for civil servants and public sector employees?


Civil servants cannot use the company pension scheme as part of their civil service work. You will receive a pension that is higher than the statutory pension. It is different for public sector employees. They receive a company pension scheme as part of the additional pension scheme. In addition, various collective agreements in this area regulate the options for deferred compensation for public sector employees.

When is company pension provision worthwhile?


The company pension scheme (bAV) is (almost) always worthwhile, at least since 2019. For all contracts concluded since then, the employer has to pay 15 percent of the contribution as a subsidy if the conversion takes place via the insurance-based implementation channels and the employer thereby Saves social security contributions. Because thanks to the deferred compensation, the company saves social security contributions on the employer's share. This benefit must be passed on to the employee. Employees with older contracts don't go away empty-handed either: these rules have also applied to them since 2022. If the employer bears the contributions alone, grants higher subsidies or can negotiate special contractual conditions with the pension institution, you benefit even more.

Special case: high earnings


Employees whose income is above the contribution assessment limit for pension insurance no longer save social security contributions with the company pension scheme. You benefit from tax savings, in individual cases from a voluntary employer subsidy, simplified access to the pension scheme and special contribution conditions. It is therefore important to carefully consider in each individual case whether a company pension plan or a private pension insurance is cheaper. Because with private pension insurance, you later only pay tax on the income portion. We would be happy to advise you on this.

How is company pension provision supported?


Contributions to insurance-based company pension schemes are tax-free up to 8 percent of the contribution assessment limit (BBG) of the statutory pension insurance (BBG West). In 2024, this corresponds to 604 euros per month (7,248 euros per year).
An additional amount of up to 960 euros per year remains tax-free for employer-financed contributions for low-income earners
Contributions to the provident fund and to the direct commitment as a company pension plan are fully tax-free
4 percent of BBG DRV-West is exempt from social security contributions as part of the insurance-based implementation methods of company pension provision. For 2024 that is 302 euros per month (3,624 euros per year).
Contributions financed by the employer to the provident fund and to the direct commitment for the company pension scheme are fully exempt from social security contributions, as part of a salary conversion up to 4 percent of the BBG DRV-West. For 2024 that is also 302 euros per month (3,634 euros per year).

Are social security contributions due for the company pension?


Pensioners who are covered by statutory health and nursing care insurance must pay contributions for the company pension.

In health insurance, there is an allowance of 169.75 euros for compulsorily insured pensioners (as of 2023). If the company pension plan exceeds this value, health insurance contributions are only due for the excess portion.

In nursing care insurance, there is an exemption limit of the same amount for compulsorily insured pensioners, i.e. 169.75 euros (as of 2023). If the company pension plan exceeds this value, nursing care insurance contributions will be charged on the entire pension, not just the excess portion.

People with private health insurance are not affected by this, as their contribution is independent of their income.

What happens if you change employer?


Employer-financed pensions vest after three years at the latest and if you are at least 21 years old, i.e. these can no longer be withdrawn from you if you leave. The employer can only adjust these regulations to your benefit. By law, deferred compensation is vested immediately from the start. With such a vested pension entitlement you have the following options:

The new employer takes over the care and continues it.
You continue the insurance yourself (not possible with provident fund and direct commitment as a company pension plan).
You make the contract free of contributions or receive an entitlement to the benefit from your old employer.

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