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How the company pension pays off


Relaxed in old age: good old-age provision helps.
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The latest reforms have made company pension schemes much more attractive. Whether or not retirement provision is worthwhile depends on many factors. In individual cases, a detailed examination is worthwhile.

W.he still remembers Andrea Nahles? It wasn’t long ago that she was the first woman to head the SPD. Since her crashing resignation in June 2019, it has become quiet around her, since August she has been President of the Federal Agency for Post and Telecommunications. But some reforms from her time as minister of social affairs, some of which are highly controversial, are still having an impact today: mother’s pension, pension at 63 – and the strengthening of company pensions.

Employees pay part of their salary into a savings product and receive a subsidy from the employer, or the employer pays in alone. A pension is then paid out in retirement and in the event of disability, and in the event of death also to the surviving dependents. This company pension scheme has been significantly improved since 2018 by the Nahles reform. Since then, eight percent of the so-called contribution assessment limit can be converted into a company pension instead of the previous four percent tax-free and four percent free of social security contributions. This limit is the maximum gross wage that is included in determining the statutory pension insurance contributions and increases every year. According to this, 568 euros per month tax-free and 284 euros free of social security contributions can be paid in in 2021.

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