Save on taxes and social security contributions with company pension schemes! Pretty neat, isn't it?

Up to 8% of the contribution assessment ceiling of the statutory pension insurance (West) is tax-free. In 2026, this amounts to EUR 676 per month or EUR 8,112 per year. If, at the same time, a payment is made into a flat-rate taxed direct insurance policy (contracts with an insurance start date up to December 31, 2004), the contributions for this insurance are to be deducted from the maximum amounts mentioned above.

Yes, if the contributions during the accumulation phase are tax-free, the payout must be taxed accordingly. However, during the payout, the tax rate applicable in retirement age applies. Since the tax rate depends largely on the level of income, you can expect a tax advantage if your income in retirement is lower than during your active working life.

In the personal consultation, the calculated net personal contribution (what does my company pension cost me in the end) takes into account the advantage of tax and social security exemption as well as the employer contribution. It is derived from the difference between your paycheck with and without company pension scheme. If your salary remains constant, you can lay out the statements side by side, and the difference will correspond to the net cost calculated by your advisor.

We often receive inquiries about why the deduction for the gross salary conversion is listed at the bottom of the payslip instead of the calculated net personal contribution. This is due to the structure of payroll programs. These programs function in a way that reduces the values for the so-called "tax and social security gross" through salary conversion from the gross. As a result, lower deductions are applied, which initially leads to a HIGHER net salary / statutory net compared to a payslip without company pension scheme. The amount of the gross salary conversion is then deducted from this higher net amount, and as a result, the net personal contribution calculated by your advisor remains as your expense.

No, there is no need to declare it in the tax return. Your tax and social security benefits are directly accounted for in the payslip. This allows you to benefit immediately without having to wait for a refund in your income tax return.

Up to 4% of the income threshold for statutory pension insurance (West) is non-contributory for health, long-term care, unemployment and pension insurance. In 2026, this amounts to €338 per month or €4,056 per year. It should be noted that social security contributions only have to be paid within the so-called contribution assessment limits. These limits mean that no further social security contributions are deducted for income above the corresponding annual limit. In this context, salary and deferred compensation are always exempt from social security contributions, regardless of the 4% limit. The annual contribution assessment ceiling for health and long-term care insurance in 2026 is EUR 69,750; for pension and unemployment insurance = EUR 101,400.

If social security contributions decrease due to salary conversion, the entitlements from statutory social security (e.g., statutory pension insurance) and potentially other social benefits (e.g., parental benefits) adjust accordingly. However, in conjunction with government subsidies and employer contributions, the benefits of salary conversion typically outweigh the disadvantages. For more details, you can inquire during a personal consultation.

If you have statutory health insurance, contributions to health and long-term care insurance at the full contribution rate are generally due on the payment of your company pension at retirement age. This applies regardless of whether the company pension is paid out as a lifelong pension or as a lump sum.
However, your health insurance contributions are significantly reduced by a monthly allowance of EUR 197.75 (as of 2026) under the pensioners' health insurance scheme (KVdR) and the contributions for health and long-term care insurance are even waived completely if your monthly company pension is below this limit. It is also important to know that the tax-free amount is linked to the general salary trend and therefore a significant increase in the tax-free amount can be expected over the years. If you receive several company pensions, the tax-free amount applies in total and not per company pension.
If your monthly occupational pension is higher than the tax-free amount, the contribution to long-term care insurance is payable on the full occupational pension and the contribution to health insurance only on the difference to the tax-free amount. The contributions to health and long-term care insurance are fully deductible as special expenses and therefore reduce your tax burden.
If your company pension is paid out as a lump sum, the lump sum is first converted into a monthly value to calculate the contributions within the pensioners' health insurance scheme (KVdR). To do this, the amount paid out is always divided by 120. For 50,000 euros, this would result in 416.67 euros. The health insurance contribution is then calculated on the basis of these 416.67 euros - less the current allowance of 197.75 euros. Assuming a contribution rate of 17.50%, this would be 38.31 euros per month. The contribution to statutory long-term care insurance is calculated separately and, with a contribution rate of 3.60% in this example, amounts to EUR 15.00 per month. If the company pension is paid out in a lump sum, the obligation to pay contributions to health and long-term care insurance ends after 10 years!