FAQ – Second Company Pension Strengthening Act

The Second Company Pension Strengthening Act is intended to further expand company pension schemes (bAV) in Germany. It particularly focuses on smaller companies and employees with low incomes, who often have no company pensions to date. The law creates better framework conditions so that more employees receive additional pension provision.

The company pension supplements the statutory pension and helps employees to be better financially secure in old age. Especially in times of demographic change, it is important to make additional provisions to ensure your standard of living in retirement. The company pension is ideal for this.

The law is primarily aimed at: Employees with low incomes: This group particularly benefits from higher government subsidies. Small and medium-sized companies and their employees: By simplifying participation in existing social partner models, more companies can offer their employees a simple, efficient and at the same time secure company pension. In times of skilled labor shortages, employers have the opportunity to easily attract employees and retain them by offering a company pension.

Significantly more employees than before have the opportunity to take part in efficient, cost-effective, tailor-made and secure tariff pensions and in this way to build up a supplementary pension. Special support for low-income earners: Employees with a gross income of up to 2,575 euros per month (as of 2026) benefit from additional state funding if their employer promises them a company pension (max. 960 euros contribution, max. 288 euros funding). From January 1, 2027, this income limit will be raised to 3% of the pension insurance contribution assessment limit (based on 2026: 3,042 euros per month) and will thus be made more dynamic so that employees will no longer fall out of support due to an increase in income. This increases planning security. In addition, the funding contribution will be increased so that from 2027, employer contributions of up to 1,200 (instead of the previous 960) euros will receive tax relief annually (funding max. 360 instead of 288 euros). More flexible pension access: Employees will have the opportunity to receive their company pension in the future even if they receive a partial pension from the statutory pension insurance. This allows for more flexibility in retirement.

More attractive company pensions without additional effort: Small and medium-sized companies can join existing social partner models without having to negotiate their own collective agreement. The prerequisite is that the social partner models open up accordingly. This means less bureaucracy and effort for the company and at the same time an attractive offer for the employees. Tax incentives and government subsidies: Employers who offer a company pension to low-income employees benefit from tax relief. For every euro that you pay into the company pension, the state gives back 30 cents. This makes it more attractive for him to offer retirement provision. Employee retention and recruitment: With the option of offering a company pension, companies can position themselves as an attractive employer. This helps small companies in particular to attract new skilled workers and retain existing employees - a decisive advantage in the competition for talent.

The social partner model is a company pension system based on a collective agreement between employers' associations or individual employers and unions. The model offers the advantage for employers that they are only liable for their contribution payments, but not for a specific pension amount. At the same time, employees benefit from potentially higher company pensions, which are still secure.

Yes, companies that are not bound by collective agreements can participate in existing social partner models if their employees fall under the responsibility of the union that supports the social partner model and if the social partner model opens up accordingly. This potentially makes it easier for smaller companies in particular to offer their employees a company pension in a very simple way, without having to conclude their own collective agreement.

The Second Company Pension Strengthening Act provides strong impetus to enable greater spread of company pension provision. In 2028 it will be determined whether this goal has been achieved. If this is not the case, the federal government will be obliged to examine options for further expansion of company pensions, including the possibility of mandatory company pensions.

The statutory pension is pay-as-you-go, which means that the contributions collected are used practically at the same time to pay out the pensions. The company pension scheme, on the other hand, is usually funded, which means that the contributions paid in are saved and the pension benefits are later financed from them. It is wise to organize retirement provision using both systems and not to just use one of the two. In addition, the pay-as-you-go statutory pension requires a solidarity-based compulsory insurance system. Because today's contributors who finance today's pensions must be able to rely on the fact that their future pensions will be financed by the then active contributors. Choices that shift opportunities and risks unilaterally and selectively within the community of solidarity harm the entire community of insured people. Therefore, the possibility of paying voluntary contributions to statutory pension insurance is very limited and must continue to be very limited. Therefore, the Second Company Pension Strengthening Act makes it clear that the possibility of paying additional contributions into the statutory pension insurance in order to avoid deductions only exists after the age of 50.