Occupational pension schemes offer attractive tax advantages for employers and employees alike. We explain the five implementation routes and their tax characteristics.
Why Occupational Pension Schemes Are Attractive for Employers
The occupational pension scheme (bAV) is a central component of the remuneration strategy of modern companies. It serves not only to retain and attract employees but also offers considerable tax advantages for both parties. Since the Betriebsrentenstärkungsgesetz (BRSG), employees also have a statutory entitlement to salary sacrifice pursuant to § 1a BetrAVG.
The Five Implementation Routes at a Glance
1. Direct Commitment (Pension Promise)
With a direct commitment, the employer undertakes to pay an occupational pension directly. The formation of pension provisions pursuant to § 6a EStG reduces taxable profit. For the employee, tax liability arises only upon retirement.
2. Support Fund
The support fund is a legally independent pension institution. Employer contributions are deductible as business expenses (§ 4d EStG). There is no cap on tax-exempt contributions.
3. Direct Insurance
Direct insurance is effected through a life insurance contract in favour of the employee. Contributions of up to EUR 302 per month (as at 2025) are tax-exempt pursuant to § 3 Nr. 63 EStG.
4. Pension Fund (Pensionskasse)
Similar to direct insurance, but organised through a special pension institution. The tax treatment of contributions mirrors that of direct insurance. Pension funds are subject to insurance supervision.
5. Pension Fund (Pensionsfonds)
The Pensionsfonds combines flexibility in capital investment with a minimum benefit guarantee. It allows for a higher equity ratio than Pensionskassen and thus offers higher long-term return potential.
Tax Advantages for the Employer
Business Expense Deduction
All employer expenditures on the bAV are deductible as business expenses. This applies to direct premium payments as well as to allocations to pension provisions.
Social Security Contribution Savings
In the case of salary sacrifice, the employer saves the employer's share of social security contributions. Since the BRSG, the employer must contribute at least 15 per cent of the converted remuneration as a subsidy for new contracts, provided that social security contributions are saved (§ 1a Abs. 1a BetrAVG).
Tax Advantages for Employees
Contributions to direct insurance, Pensionskasse or Pensionsfonds are tax-exempt up to eight per cent of the contribution assessment ceiling of the statutory pension insurance (West). In 2025, this corresponds to approximately EUR 7,248 per annum. Taxation takes place on a deferred basis upon retirement.
Structuring Recommendations
The choice of the optimal implementation route depends on the size of the company, the remuneration structure and the employer's strategic objectives. A combination of different implementation routes may be advisable in order to provide optimal coverage for different employee groups.
Conclusion
The occupational pension scheme is far more than a compliance obligation. When properly structured, it creates a genuine competitive advantage in recruiting and at the same time offers considerable tax benefits. At compleneo, we advise you comprehensively on all implementation routes and develop a bAV concept tailored to your company.
