Pensions: More employees should get company pensions

In Germany, more people should benefit from a company pension than before. In this way, employees with low and medium earnings should also be increasingly secured for old age. This is aimed at the “Second Company Pension Act” by Minister of Social Affairs Bärbel BAS and Finance Minister Lars Klingbeil (both SPD), which was adopted in the cabinet and is now to be discussed in the Federal Council in the next few weeks. The law is to be implemented on January 1, 2026, as government spokesman Stefan Kornelius announced.

The government sees gaps in the spread of company pensions, especially among smaller companies. Such employers should be able to offer an easy company pension in the future – for example in the context of a company agreement. The existing social partner model, in which employers’ associations and unions can agree to company pension schemes, is to be further developed accordingly.

BAS and Klingbeil should strengthen columns

“Good company pensions contribute to the quality of life in old age,” said Bas. They are efficient and safe, especially if they are organized by the social partners on a collective basis. Klingbeil spoke of an important pillar next to the legal pension. Company pensions help to ensure that people who had worked hard all their lives could live well from their pension.

At the beginning of August, the cabinet had already launched a template for the statutory pension. It provides for a stable pension level by 2031 and better pensions for millions of mothers. The coalition plans to decide on the draft in the Bundestag by the end of the year. The improvements should be paid for with tax money. However, in view of the aging of the company, employees and employers also have to adjust to higher costs: From 2027, the pension contribution from today should increase from 18.6 to 18.8 percent according to the draft law.

Distribution of company pensions decreased

The spread of company pensions has decreased: 18.1 million employees subject to social security contributions had an active company pension entitlement with their employer at the end of 2023. That was around 500,000 more than in 2017. But employment rose stronger in relation. Therefore, the distribution rate of company pensions decreased slightly to 52 percent.

According to the bill, the tax improvements now planned should cost the state around 155 million euros annually.

So-called opting-out systems are to be made easier, in which one has to contradict if part of the fee is not to be used automatically for company pensions.

Risks and thus returns should be higher when saving. Regulations for pension funds are “flexible”, as it is said. The tax funding of the company pensions is also to be increased.