- Country Information
- Germany
What is the bAV Pension Scheme in Germany?
The betriebliche Altersversorgung (bAV) is Germany’s occupational pension scheme, a supplementary retirement benefit offered by employers to enhance employees’ financial security in retirement. Under this arrangement, both employers and employees contribute to the pension plan.
Employers are legally required to contribute when employees opt into the scheme.
As part of our commitment to compliance and employee well-being, Horizons provides access to a high-quality, flexible bAV program through a trusted local partner.
Employee Enrollment and Contributions
Participation in the bAV scheme is voluntary and available through salary conversion (deferred compensation). Employees elect to set aside a portion of their gross salary each month, which is then invested in a pension plan.
Benefits of this setup include:
Access to discounted insurance tariffs
A flexible, modern investment strategy with over 100 fund and ETF options
Employees interested in learning more can schedule a one-on-one meeting with our partner advisor. These sessions offer a personalized overview of the pension plan, including simulations based on individual contribution levels. Participation in these meetings is optional and non-binding.
Employer Contributions
Employers in Germany are legally obligated to contribute to the bAV when an employee opts in. Horizons fulfills this obligation by offering:
A 15% employer top-up on the employee’s monthly deferred salary
Employer contributions capped at €504 per year (approximately €42 per month)
For example, if an employee contributes €100 per month, Horizons contributes an additional €15.
This employer contribution often reduces overall social security liabilities, making the program cost-effective or even cost-neutral for employers.
Note that employer contributions apply only if the employee participates in the scheme.
Contributions Breakdown
The financial impact of the bAV scheme benefits both employees and employers.
For Employees:
Contributions are exempt from income tax and social security charges (up to approximately €3,500 per year)
Savings grow on a tax-deferred basis, increasing long-term retirement value
For Employers:
The 15% top-up may be offset—partially or fully—by lower employer-side social security contributions
This makes the contribution not only compliant but also financially efficient
Example:
When an employee defers €100 of gross salary, the employer is required to contribute €15. However, because this amount is not subject to standard social security charges, the net cost to the employer may be significantly lower than the full €15.
A breakdown of employer costs by gross monthly salary will be provided in the accompanying table.
Frequently Asked Questions
Can employees choose their own pension fund provider?
No. Employees cannot choose an alternative provider under the Horizons-managed scheme.
What if an employee wants to change their salary sacrifice amount?
Employees can adjust their contribution amount at any time with the support of our partner, Tecis. Monthly contributions must fall between €25 and €644 and are fully flexible within that range. To do so, simply connect with the introduced partner of Horizons.
Can employees voluntarily opt out of the pension plan without offboarding?
Yes. Employees may reduce, pause, or stop their contributions at any time without providing a reason. It is common for contributions to be paused during parental leave, long-term illness, or personal financial planning. Opting out is entirely voluntary. To do so, simply connect with the introduced partner of Horizons.
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