Company pensions: understand the offer before signing

A Betriebsrente is retirement provision connected to employment. Find out whether the employer contributes its own money, you give up part of your salary, or both, before deciding what the offer is worth to you.

Identify what is offered

Ask HR for the pension promise in writing, the name of the provider, how the pension is arranged, any collective or workplace agreement, and the product documents. A Direktversicherung, Pensionskasse, Pensionsfonds, direct employer promise and support fund are not interchangeable products. Separate this offer from your statutory pension record and from a private retirement contract.

Eligible employees can request Entgeltumwandlung under BetrAVG section 1a, within the statutory limit. This means using part of future salary for the company pension. Collective-agreement rules can affect how you use that right, and you do not have an unrestricted choice of provider. Ask what your employer offers and whether an enrolment or opt-out deadline applies.

Ask for a written comparison

Before agreeing, obtain:

1. Funding: your salary contribution, the employer’s separate contribution and the exact subsidy rule. Under section 1a(1a), the employer normally adds 15 percent of converted salary to a Pensionsfonds, Pensionskasse or Direktversicherung to the extent it saves social-insurance contributions. Collective agreements can depart from this. Ask payroll to show its actual calculation rather than assume every offer adds 15 percent without conditions.
2. Today’s pay: a payroll illustration with and without the arrangement. Tax exemption and social-insurance exemption have different limits; for the ordinary funded routes, section 3 number 63 EStG allows tax exemption within its conditions up to eight percent of the annual pension contribution ceiling, whereas social-insurance exemption is generally limited to four percent. Have payroll check the current year and existing contributions.
3. Costs and benefits: all acquisition, administration, fund and transfer costs, guaranteed versus projected payments, retirement age, payout options and any survivor/disability cover. Obtain an explanation of the promise type; a pure defined-contribution promise has different guarantees. Compare the eventual benefit after likely deductions, not just the projected gross pension.

Check a job change before cancelling anything

Pension rights built up through salary conversion generally stay yours if you leave the employer: they are protected from the start under section 1b(5). Purely employer-funded promises have age/service conditions and possible older transitional rules. Ask for a written statement of what is vested when you leave, the pension value and the contact that will administer it.

Ask your old and new employer whether the pension promise can continue, be left paid-up, be financed privately or be transferred. Compare the costs and guarantees of each option. Section 4(3) gives a right to demand a transfer within one year after employment ends for qualifying Pensionsfonds, Pensionskasse and Direktversicherung rights within its value limit. This does not mean every old contract can automatically move unchanged to every employer. Check the applicable date with HR early.

Keep records through breaks and departure

Before unpaid leave, unemployment or a move abroad, ask who pays future contributions, whether contributions can pause, what insurance riders end and how to update your address. Leaving Germany does not itself mean the company pension becomes immediately withdrawable. Keep the promise, contribution history, annual statements and job-change confirmations together. At retirement, contact the employer/provider separately from Deutsche Rentenversicherung for the company benefit.