Betriebliche Altersvorsorge (bAV) is company-sponsored retirement provision. The most common form is Entgeltumwandlung: the employee converts part of their gross salary into pension contributions before tax and social security deductions.
Tax and contribution benefits 2026
- Tax-free: up to 8% of the pension insurance assessment ceiling = 7,728 €/year (96,600 € × 8%)
- Social security-free: up to 4% = 3,864 €/year
- Mandatory employer contribution: 15% on salary conversion amounts
Forms of bAV
- Direct insurance (Direktversicherung) – most common
- Pension fund (Pensionskasse)
- Direct commitment (Direktzusage)
- Support fund (Unterstützungskasse)
- Pension fund (Pensionsfonds)
Sources: BetrAVG, § 3 No. 63 EStG, BMAS.