FAQ
Find answers to frequently asked questions.
Benefits
What are the advantages of a corporate pension scheme?
Corporate pension schemes offer several advantages for employers. They can position themselves as an attractive employer and thus increase employee retention. In addition, occupational pensions can be tax deductible and thus save costs.
What does positioning as an attractive employer through corporate pensions mean?
Employees increasingly value good pension provision. When an employer offers a corporate pension scheme, it signals that it cares about the long-term security of its employees. This can be an important factor in attracting and retaining employees.
How can a corporate pension help to save costs?
Through deferred compensation, employers can save on non-wage labour costs, as contributions to the corporate pension scheme are not considered as remuneration and therefore no social security contributions are levied on them. In addition, depending on the type of corporate pension, employers can make savings on insurance premiums or administrative costs.
Can employers also use corporate pensions to motivate employees?
Yes, corporate pensions can also be used to motivate employees. For example, employers can offer the possibility for employees to contribute voluntarily the corporate pension plan in addition to the employer’s contribution.
What are the long-term benefits of a pension for employers?
Corporate pensions can help to increase employee retention and satisfaction in the long term. In addition, corporate pensions can help to reduce old-age poverty among employees and thus also serve social policy objectives.
Accounting & Tax implications
How can an corporate pension be tax deductible?
Contributions to corporate pension schemes can usually be deducted as business expenses. In addition, there are possibilities for tax incentives, for example the possibility of a tax-free payment by the employer or the possibility of deferred compensation.
What are the advantages of a corporate pension scheme?
Corporate pension schemes offer several advantages for employers. They can position themselves as an attractive employer and thus increase employee retention. In addition, occupational pensions can be tax deductible and thus save costs.
What does positioning as an attractive employer through corporate pensions mean?
Employees increasingly value good pension provision. When an employer offers a corporate pension scheme, it signals that it cares about the long-term security of its employees. This can be an important factor in attracting and retaining employees.
How can a corporate pension help to save costs?
Can employers also use corporate pensions to motivate employees?
Yes, corporate pensions can also be used to motivate employees. For example, employers can offer the possibility for employees to contribute voluntarily the corporate pension plan in addition to the employer’s contribution.
What are the long-term benefits of a pension for employers?
How can an corporate pension be tax deductible?
Contributions to corporate pension schemes can usually be deducted as business expenses. In addition, there are possibilities for tax incentives, for example the possibility of a tax-free payment by the employer or the possibility of deferred compensation.
Benefits
Why should I do it?
Pension benefits from statutory pension will not be sufficient to maintain your lifestyle once you retire. On average, the pension gap between last income before retirement and statutory pension is 35-40%. This means, you would probably have less money than you need to cover your cost of living.
Substituting your pension is necessary. Besides private provision, corporate pension is a good add-on to your savings as it is subsidised by your employer due to a a legal obligation.
Die Aufstockung deiner Rente ist notwendig. Neben der privaten Vorsorge ist die betriebliche Altersvorsorge eine gute Ergänzung, denn sie wird bezuschusst.
Do I have to do it?
No. There is no obligation to do Corporate Pensions with your employer.
What happens if I don't do it?
You miss out on extra-money for your pension savings given to you by your employer (at least 15%).
What's in it for me?
You are able to build up additional pension savings that are subsidised both by your employer (at least 15% add-on) and the government (free of tax and social security contributions).
This has significant positive effect on your net cost and return.
I invest in ETFs / stocks. Do I need Corporate Pensions?
Je mehr, desto besser 😉
The more, the merrier ;)
It's great that you are already creating wealth for later stages in life. Wether you actually need corporate pensions or not cannot be answered on a general basis but why not take the free money that your employer offers?
We'd recommend to look at possibilities of pension provisioning with "and" instead of "or" in mind.
What is Corporate Pension?
What exactly is a corporate pension?
A corporate pension is one in which the employer promises its employee benefits for old age, disability or surviving dependants on the basis of the employment relationship. The term "occupational pension" is often used as a synonym.
When does a corporate pension pay off?
Since your employer always pays you at least 15% as a bonus on your corporate pension, it is always worthwhile because you receive this subsidy in addition to your normal salary.
This means that you already have a 15% return on your investment from day 1.
What are the benefits of corporate pensions?
Your employer is legally obliged to offer you a corporate pension that includes benefits for retirement.
This means that you receive a benefit when you retire.
Does deferred compensation have disadvantages?
No.
If you convert parts of your gross salary for the corporate pension, no social security contributions will be withheld for these salary parts. The conversion therefore leads to a slight reduction in benefits for statutory pension insurance, unemployment benefit and sickness benefit.
However, the advantage of higher benefits in retirement due to corporate pensions clearly outweighs this effect.
Is there a minimum/maximum age for corporate pensions?
The earlier you start saving, the more positive the compound interest effect will be on your old-age provision.
Even at an older age, corporate pensions make sense due to the employer's subsidy. We help in finding the best setup for you in a personal session.
How does Corporate Pensions work?
Who pays for the corporate pension?
In most cases, the savings contributions are paid jointly by you and your employer.
You determine the amount of your monthly payments and your employer is legally obliged to add at least 15% on top.
Your share is deducted from your gross salary as deferred compensation and paid into the corporate pension together with the subsidy. This is done directly by the employer, you don't have to worry about anything.
How much can I pay into the corporate pension scheme?
Contributions to corporate pensions are exempt from social security contributions up to a maximum of 4% of the income threshold (BBG) and tax-free up to 8% of the income threshold (BBG).
From 01.01.2023, you can therefore pay in € 292 (BBG RV West) or € 284 (BBG RV East) together with your employer free of social security contributions and tax.
How does a corporate pension work?
By law, your employer is obliged to offer you a corporate pension via direct insurance. This means that the contributions are invested in a life insurance policy. Your employer contracts an insurance policy in your name. Your employer is therefore the policyholder and you are the insured person.
Monthly contributions are paid into this contract by you and your employer via the payroll. This gives rise to your entitlement to benefits under the corporate pension scheme.
How much should I pay into the corporate pension scheme?
That depends on your personal situation.
Let us determine this individually in a consultation.
What is necessary to start a corporate pension scheme?
In a consultation we will determine your pension needs with you. Based on this, you decide how much you want to pay into the corporate pension.
A deferred compensation agreement is concluded between you and your employer and you receive a pension commitment from your employer based on your personal factors.
Your employer defines the framework conditions for the corporate pension offer in the pension scheme. It states, for example, that the corporate pension will be carried out by means of direct insurance. Therefore, the employer contracts an insurance in your name.
You will then receive all contracts and documents via your personal Penzilla account.
What benefits do I receive from the corporate pension scheme?
When you retire, you will receive a lifelong pension from the insurance policy contracted for you. The insurance company pays out the pension directly to you.
Depending on the insurance contract, a one-time capital payment at the start of the pension may also be possible.
Why should I do it?
Die Leistungen aus der gesetzlichen Rente werden nicht ausreichen, um deinen Lebensstil im Ruhestand aufrechtzuerhalten. Im Durchschnitt beträgt die Rentenlücke zwischen dem letzten Einkommen vor dem Ruhestand und der gesetzlichen Rente 35-40 %.
Das bedeutet, dass du wahrscheinlich weniger Geld zur Verfügung hast, als du zur Deckung deiner Lebenshaltungskosten brauchst.
Die Aufstockung deiner Rente ist notwendig. Neben der privaten Vorsorge ist die betriebliche Altersvorsorge eine gute Ergänzung, denn sie wird bezuschusst.
Do I have to do it?
No. There is no obligation to do Corporate Pensions with your employer.
What happens if I don't do it?
You miss out on extra-money for your pension savings given to you by your employer (at least 15%).
What's in it for me?
You are able to build up additional pension savings that are subsidised both by your employer (at least 15% add-on) and the government (free of tax and social security contributions).
This has significant positive effect on your net cost and return.
I invest in ETFs / stocks. Do I need Corporate Pensions?
Je mehr, desto besser 😉
The more, the merrier ;) It's great that you are already creating wealth for later stages in life. Wether you actually need corporate pensions or not cannot be answered on a general basis but why not take the free money that your employer offers?
We'd recommend to look at possibilities of pension provisioning with "and" instead of "or" in mind.
What exactly is a corporate pension?
A corporate pension is one in which the employer promises its employee benefits for old age, disability or surviving dependants on the basis of the employment relationship. The term "occupational pension" is often used as a synonym.
When does a corporate pension pay off?
Since your employer always pays you at least 15% as a bonus on your corporate pension, it is always worthwhile because you receive this subsidy in addition to your normal salary.
This means that you already have a 15% return on your investment from day 1.
What are the benefits of corporate pensions?
Your employer is legally obliged to offer you a corporate pension that includes benefits for retirement.
This means that you receive a benefit when you retire.
Does deferred compensation have disadvantages?
No.
If you convert parts of your gross salary for the corporate pension, no social security contributions will be withheld for these salary parts. The conversion therefore leads to a slight reduction in benefits for statutory pension insurance, unemployment benefit and sickness benefit.
However, the advantage of higher benefits in retirement due to corporate pensions clearly outweighs this effect.
Is there a minimum/maximum age for corporate pensions?
The earlier you start saving, the more positive the compound interest effect will be on your old-age provision.
Even at an older age, corporate pensions make sense due to the employer's subsidy. We help in finding the best setup for you in a personal session.
Who pays for the corporate pension?
In most cases, the savings contributions are paid jointly by you and your employer.
You determine the amount of your monthly payments and your employer is legally obliged to add at least 15% on top.
Your share is deducted from your gross salary as deferred compensation and paid into the corporate pension together with the subsidy. This is done directly by the employer, you don't have to worry about anything.
How much can I pay into the corporate pension scheme?
Contributions to corporate pensions are exempt from social security contributions up to a maximum of 4% of the income threshold (BBG) and tax-free up to 8% of the income threshold (BBG).
From 01.01.2023, you can therefore pay in € 292 (BBG RV West) or € 284 (BBG RV East) together with your employer free of social security contributions and tax.
How does a corporate pension work?
By law, your employer is obliged to offer you a corporate pension via direct insurance. This means that the contributions are invested in a life insurance policy. Your employer contracts an insurance policy in your name. Your employer is therefore the policyholder and you are the insured person.
Monthly contributions are paid into this contract by you and your employer via the payroll. This gives rise to your entitlement to benefits under the corporate pension scheme.
How much should I pay into the corporate pension scheme?
That depends on your personal situation.
Let us determine this individually in a consultation.
What is necessary to start a corporate pension scheme?
In a consultation we will determine your pension needs with you. Based on this, you decide how much you want to pay into the corporate pension.
A deferred compensation agreement is concluded between you and your employer and you receive a pension commitment from your employer based on your personal factors.
Your employer defines the framework conditions for the corporate pension offer in the pension scheme. It states, for example, that the corporate pension will be carried out by means of direct insurance. Therefore, the employer contracts an insurance in your name.
You will then receive all contracts and documents via your personal Penzilla account.
What benefits do I receive from the corporate pension scheme?
When you retire, you will receive a lifelong pension from the insurance policy contracted for you. The insurance company pays out the pension directly to you.
Depending on the insurance contract, a one-time capital payment at the start of the pension may also be possible.
Do you have other questions?
Contact us or check our Lexicon to get an even better understanding of corporate pensions.
