Mandatory Contribution for Employers: An Overview of bAV Benefits

In a significant shift for employers, changes to the salary conversion and bAV (betriebliche Altersvorsorge) contributions are set to take effect from January 1, 2022. These changes aim to make company pensions more attractive for employees and help them with retirement planning.

For years, employers have enjoyed savings on payroll costs through salary conversion. However, from next year, a large part of these savings must be passed on to employees. This requirement applies to both new and existing contracts.

Employers with employees covered by occupational pension schemes are obligated to share a significant portion of the cost savings gained from these pension benefits with their employees. This obligation typically affects companies that offer direct insurance, pension funds, or similar pension commitments. Existing employment contracts may need to be adjusted to reflect the employee’s right to these savings, ensuring transparent calculation and distribution of cost savings related to pension schemes.

The employee's claim does not apply retroactively before January 1, 2022, but it does afterwards. This means that employers do not have to worry about high back payments due to the legal obligation applying prospectively and not retroactively for existing contracts.

To avoid potential back payments and liability risks, employers are advised to review their bAV commitments. Failure to comply with the new regulations could result in liability risks for lost interest payments and reduced pension claims.

W&K Wirtschaftsberatung, an independent firm operating since 2010, offers fee-based financial advice for selected professional groups in cooperation with Honorarfinanz. Tino Weissenrieder, the managing director of W&K Wirtschaftsberatung in Lahr, provides comprehensive advice and support in financial and insurance matters. Employers seeking guidance on these changes can benefit from W&K Wirtschaftsberatung's expertise.

bAV is a method of converting parts of the salary through salary conversion for retirement preparation. The regulation applying to bAV contributions will extend to existing contracts from next year, making it essential for employers to review their commitments and ensure compliance by 2022.

In summary, employers must pass on a large part of the savings from salary conversion to employees from 2022. Every employee can use bAV to prepare for retirement through their employer via salary conversion. This requirement applies to existing contracts as well as new ones starting from 2022. Employers are advised to review their bAV commitments to ensure compliance and avoid potential liability risks.