Germany's New Pension Law: Employers Must Contribute More Starting 2022
Starting January 1, 2022, employers in Germany will have new obligations regarding occupational 'news'. The Second Occupational Pensions Strengthening Act (BRSG II) comes into effect, expanding the scope of the previous Betriebsrentenstärkungsgesetz (BRSG) regulation. Under the new rules, employers must contribute 15% to each betriebliche Altersvorsorge (bAV), which is a form of salary conversion into pension provisions. This includes direct insurance, pension funds, and pension fund savings. Previously, this was only mandatory for new contracts starting January 1, 2019. Now, it applies to older salary conversion agreements as well. The employer's contribution is conditional on saving on social security contributions when employees convert part of their gross salary into bAV contributions. This means employers can benefit from reduced social security contributions while also providing better pension provisions for their employees. The BRSG II legislation significantly strengthens occupational pensions for all employees starting January 1, 2022. Employers will need to contribute more to their employees' pensions, but they will also see savings on social security contributions. This act aims to improve the retirement prospects of employees across Germany.
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