Company pension (bAV)

The betriebliche Altersvorsorge (bAV, company pension scheme) is a supplementary pension organised through your employer. Since 2002, EVERY employee in Germany has had a legal right to salary conversion.

How does salary conversion work?

• You give up part of your gross salary
• This part goes into a pension product (pension fund, direct insurance, etc.)
• Free of tax and social security contributions up to €302/month (2025)
• The employer MUST pay at least a 15% contribution (if it saves social security contributions)

Sample calculation (€200/month salary conversion):

• Your net pay drops by only approx. €100 (not €200!), because taxes and social security are no longer due
• Plus the 15% employer contribution: +€30/month for free
• Total contribution: €230/month for only €100 of your own net outlay

Disadvantages (honestly):

• Double contributions: the later pension is subject to health/long-term care insurance contributions (~18%!)
• Lower statutory pension: a lower gross salary means you collect fewer pension points
• Little flexibility: money only available from age 62, no early access

Still recommended if: the employer contributes more than 15% (some pay 50%+) or a good product (ETF-based, low costs) is offered.