The company pension (bAV) is an often underestimated tool that investors can use to secure their financial future. With attractive employer contributions and tax advantages, the bAV offers an effective way to supplement personal retirement. In this article, we will examine how investors and private savers can benefit from these advantages. The first chapter is dedicated to the mechanisms of employer contributions, while the second chapter illustrates the tax advantages of the bAV in more detail.
Employer Contributions: The Heart of Your Future Pension
In the fast-paced world of retirement, the company pension (bAV) stands out as a central element. It not only provides a welcome supplement to traditional retirement models but also offers opportunities that especially benefit employees looking for a financial turbo for their pension. An essential component of this model is the employer contributions, which have been mandatory since 2019 and allow for a significant increase in retirement income.
The true appeal of employer contributions lies in their ability to significantly enhance the saving process. If you have decided to convert part of your salary into a bAV, employers are required to provide at least 15% of the social contributions saved as a subsidy. This not only means a tangible increase in returns but also ensures that your saved money works more efficiently for retirement. For employees, this means greater security in planning and the prospect of a financially secure phase of life after the working period.
On the other hand, companies also reap huge benefits from this model. Offering an attractive bAV strengthens employees’ long-term ties to the company. In such a competitive labor market, this can make the crucial difference in attracting and retaining talent. Additionally, through lower employee turnover and fewer absences, companies save costs effectively, ultimately benefiting the company’s budget.
A further advantage lies in Private Pension Insurance with employer contributions, which can provide additional financial support. This is often promoted through capital benefits (VL), but its use heavily depends on contractual or internal agreements within the company. This form is not legally required, but it opens up further prospects for flexibility and can be complemented by state subsidies such as the Riester pension.
The strategic combination of the bAV with employer contributions represents a solid foundation on which to build secure financial planning for the future. Thanks to targeted planning and the use of tax advantages, the company pension becomes a key element of individual retirement planning.
Tax Advantages of the bAV: How to Save More Effectively for the Future
The company pension (bAV) not only offers workers the opportunity to save for retirement at low costs but also provides significant tax advantages. These advantages apply both during the accumulation phase and the disbursement phase, making the bAV a very attractive model for pension provisions.
Tax Advantages in the Accumulation Phase
One of the biggest advantages of the bAV is salary conversion. In this process, parts of the gross salary are directly converted into contributions for the bAV. This allows contributions to flow into pension provisions without being taxed, as they are not considered taxable income nor used as a basis for social contributions. In practice, this means: the gross income decreases, which also leads to a reduction in income tax and social contributions. For the year 2024, workers can contribute up to 8% of the basic contribution limit for statutory pensions tax-free into the bAV, amounting to an annual sum of up to 7,248 euros.
Interestingly, in models such as the support fund or direct promises, actual contributions are even tax-exempt without limits. This offers workers a lot of flexibility and space to design their individual pension strategy.
Rules During the Disbursement Phase
During the accumulation phase, one saves again, while in the disbursement phase, different tax rules apply. Although payments from the bAV are subject to taxation, there are exemptions and specific tax advantages that can mitigate the burden here. A notable instrument is the fifth system, which allows reducing the tax burden of a single capital payment by imposing the payment over five years as fictional income. It is important to know: starting in 2025, these requests must be declared directly in the income tax return.
Thus, the bAV creates attractive conditions for receiving more from gross income while also providing secure retirement provisions. It opens up spaces for saving and allows for optimized tax support for retirement. These advantages make the bAV a valuable addition to classic statutory pensions and can significantly improve the standard of living in old age.