Signup to the newsletter
Hogan Lovells

Workplace pensions in Germany: what you need to know

14 August 2019

  • In addition many companies, in particular large and international enterprises, choose to offer employer-financed (second tier) workplace pension schemes to help attract and retain staff. 
  • Workplace pension arrangements may be set up using one of five different pension vehicles. Details of each type of vehicle are set out in this note. 
  • Since 2002, employers must enable their staff to make employee contributions to a workplace pension scheme through salary sacrifice (Entgeltumwandlung), at the employee's request. Salary sacrifice to a workplace pension arrangement has tax advantages for the employee. 
  • Under all types of workplace pension arrangement (except for new "pure DC" arrangements – please see below), the employer remains ultimately liable for any shortfall in the funding of the benefits, even where the arrangement is nominally "contribution based". 
  • New legislation, the Occupational Pensions Strengthening Act (Betriebsrentenstärkungsgesetz)(BRSG) came into force on 1 January 2018. The BRSG is focussed on the following areas: 
    • enabling the establishment of "pure" defined contribution (DC) arrangements, subject to certain conditions; 
    • a new requirement for employers to contribute to a pension arrangement for their employees, where the employee converts (sacrifices) salary to make pension contributions 
    • allowing "auto-enrolment" into an employer's salary sacrifice arrangement, with the employee having a right to opt out; and 
    • increasing participation in workplace pension schemes, especially among lower paid workers. 

Please click here to read the full briefing

© Hogan Lovells. All rights reserved. "Hogan Lovells" or the “firm” refers to the international legal practice that comprises Hogan Lovells International LLP, Hogan Lovells US LLP and their affiliated businesses, each of which is a separate legal entity. Attorney advertising. Prior results do not guarantee a similar outcome.