Servus #24

February 2025

Table of Contents

• Party Platforms on Occupational Pensions
• Federal Ministry of Labor and Social Affairs Study on Retirement Planning
• Increase in the Maximum Actuarial Interest Rate in the Insurance Industry
• Recommendations for Implementing the Statutory Employer Contribution to Salary Conversion in Occupational Pension Schemes
• Expansion of Maternity Protection
• Rising Contribution Rates in Long-Term Care Insurance
• Social Security Registration for Employers in Germany: A Quick Guide
• Mandatory Workplace Postings: Background, Updates, and Implementation Background

Party Platforms on Occupational Pensions

With the early dissolution of the traffic light coalition, significant legislative changes and reform efforts regarding occupational pensions, statutory retirement pensions, and private retirement planning have been halted. The positions and future plans of the individual parties on these topics — where known — can be summarized as follows:

• CDU/CSU: At their party conference, the CDU adopted an immediate action plan, including an “active retirement” scheme. Under this proposal, retirees who voluntarily continue working can earn up to €2,000 per month tax-free. Additionally, instead of a daily maximum working time, a weekly cap will be introduced to allow for greater flexibility. Overtime pay will also be made tax-free. The party intends to strengthen both occupational and private pensions as supplements to the statutory system while maintaining the current pension level and retirement age.
• SPD: The SPD advocates for maintaining a minimum pension level of 48% and opposes raising the retirement age. Retirees with 45 years of contributions should still be able to retire without deductions. The party also seeks to strengthen occupational pensions, primarily through collective bargaining agreements, and to include all working individuals—self-employed workers included—into the statutory pension system.
• FDP: The FDP supports introducing a state-run equity pension modeled after the Swedish system. Private retirement savings should be promoted through a government-supported pension savings account. The party also proposes a flexible retirement age without fixed age limits.
• Greens: The Greens’ platform lacks concrete proposals for occupational pensions, instead focusing on statutory pensions. They advocate for broad workforce participation in pension contributions, a gradual transition to a partially funded system, and the introduction of a basic pension.
• AfD: The AfD aims to increase pension levels to a permanent 70% of net income. They propose including politicians and most civil servants in the statutory pension system and financing non-contributory benefits through the federal budget.

Overall, all parties seek to strengthen the pension system, though their approaches differ. The CDU/CSU and FDP prioritize strengthening private and occupational pensions, while the SPD, Greens, and AfD focus on stabilizing and increasing statutory pension levels.

Federal Ministry of Labor and Social Affairs Study on Retirement Planning

At the end of 2023, the Federal Ministry of Labor and Social Affairs (BMAS) conducted a representative empirical study on the “Prevalence of Retirement Planning” to provide a detailed assessment of pension coverage among employees subject to social security contributions. This was the fourth such study since 2011, focusing this time on the accumulation of pension entitlements across all three pillars of retirement security.
According to the study, 52% of the 31.1 million employees aged 25 to 67 with mandatory social security contributions have an occupational pension plan in addition to statutory pensions. Of these, 33% participate in an occupational pension scheme, while 15% are covered by supplementary pensions from public or church-affiliated employers. The overall occupational pension participation rate is similar between men and women. However, 38% of men acquire occupational pension entitlements compared to only 28% of women. In contrast, women (20%) are more than twice as likely as men to receive supplementary pensions from public or church-affiliated employers.

The study found that the likelihood of participating in occupational pensions increases with education and income. Only 25% of employees without formal vocational qualifications participate in an occupational pension, compared to 62% of university graduates. Employees with low gross earnings (below €1,500 per month) have an occupational pension participation rate of just 28%, whereas 77% of those earning more than €5,500 per month have one. The most common reasons cited for not participating in an occupational pension were the lack of employer-sponsored plans (41%), lack of awareness (20%), and high contribution costs (15%).

A separate study, the long-term R+V “Fears of the Germans” survey, found that 40% of Germans fear old-age poverty—43% of women and 37% of men. According to the Federal Statistical Office, 21% of women and 16% of men aged 65 and older are at risk of poverty.

Increase in the Maximum Actuarial Interest Rate in the Insurance Industry

At the beginning of 2025, the maximum actuarial interest rate—often referred to as the guaranteed interest rate—was raised from 0.25% to 1.0%. This marks the first increase in over 30 years, driven by rising interest rates since 2021. This change enables insurers to offer higher guarantees and higher guaranteed pension benefits. Additionally, the increase has a positive impact on premium calculations for term life and disability insurance policies.

Recommendations for Implementing the Statutory Employer Contribution to Salary Conversion in Occupational Pension Schemes

Since 2022, every employee in Germany is generally entitled to an employer contribution to salary conversion (Entgeltumwandlung). This applies if the salary conversion results in social security savings for the employer—meaning the employee’s annual gross salary is below the contribution assessment ceiling (Beitragsbemessungsgrenze, BBG) for statutory pension insurance.
For employers, the question arises as to how best to implement this contribution. Depending on the employer’s focus, there are two recommended approaches:

1. Focus: Simple Administration and Full Legal Compliance
• All employees receive a monthly employer contribution of 15% of the salary conversion amount.
• The converted salary amount must not exceed 4% of the BBG.
• This approach ensures legal certainty but results in additional financial costs for the employer in cases where salaries exceed the BBG.

2. Focus: Implementation Without Additional Costs for the Employer
• The employer contribution is only granted if social security contributions are actually saved.
• At the end of each calendar year, the actual salary and converted amounts for each employee are reviewed to determine whether an employer contribution is required and, if so, to what extent.
• The statutory employer contribution is made as a one-time payment.
• This approach minimizes costs but comes with increased administrative effort for the employer.

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Expansion of Maternity Protection

One of the final laws passed before the federal election significantly improved maternity protection in Germany. This legal framework safeguards women in the period immediately before and after childbirth.

Under current law, women are entitled to maternity leave and benefits for six weeks before and eight weeks after childbirth, ensuring full salary compensation during leave. Previously, maternity protection did not apply to pregnancies ending before the 24th week. If a pregnancy was lost before this threshold, affected women were not entitled to maternity leave or benefits and had to rely on sick leave instead.

The new law introduces a tiered system for maternity leave:
• From the 13th week of pregnancy: 2 weeks of maternity leave
• From the 17th week: 6 weeks of maternity leave
• From the 20th week onward: 8 weeks of maternity leave

Maternity benefits are now also extended to miscarriages occurring from the 13th week onward, with the duration of benefits corresponding to the respective maternity leave period.

Rising Contribution Rates in Long-Term Care Insurance

At the end of December, lawmakers unexpectedly approved an increase in long-term care insurance contribution rates by 0.2 percentage points. This measure aims to temporarily stabilize the system and buy time for broader reforms that will ensure long-term financial sustainability while mitigating future contribution increases.
However, when combined with the increase in social security contribution assessment limits—up by more than 6% as of January 1st—the new rates result in a substantial financial burden for both employers and employees.

Social Security Registration for Employers in Germany: A Quick Guide

Registering employees for social security is a key obligation for employers based in Germany and plays a crucial role in ensuring employees’ social protection. To comply with all legal requirements, employers should keep the following key points in mind:

1. Apply for a Company Registration Number
Before hiring employees, employers must apply for a company registration number (Betriebsnummer) through the Company Registration Number Service of the Federal Employment Agency. This number is used to identify the company within the social security system.

2. Register Employees with a Health Insurance Provider
Contributions for statutory health, nursing care, unemployment, and pension insurance are collected by health insurance providers and forwarded to the respective social security institutions.
Employers are required to register new employees with their chosen health insurance provider within six weeks of the start of employment. Late registration can result in legal and financial penalties.

Employees have the right to choose their own health insurance provider, and employers must ensure the correct provider is registered.
The following information is required for proper registration:
• Employment details
• Social security number
• Employment details

3. Payroll Processing and Contribution Payments
Employers must calculate social security contributions based on employees’ gross salaries and remit them to the relevant insurance providers. Payments are made monthly and must be submitted no later than the third-to-last banking day of the month.
Employers should keep all registration and change-related documents on file as proof in case of audits by social security authorities.

4. Accident Insurance and Professional Associations
Every employer must register with the relevant professional association (Berufsgenossenschaft), which is responsible for statutory accident insurance. This insurance covers workplace accidents and occupational illnesses. Contributions depend on the level of occupational risk in the respective industry.

5. Mandatory Reports to Social Security Institutions
Employers must regularly submit reports to social security institutions, including:
• Registration of new employees
• Annual income reports
• Deregistration upon termination of employment
• Reporting changes (e.g., salary increases, changes in working hours)

6. Use of Electronic Reporting Systems
All social security reports must be submitted electronically via the SV reporting portal (see Servus Issue 17, October 2023) or through certified payroll software. This streamlines communication with social security institutions and ensures compliance with reporting obligations.

Conclusion
Registering employees for social security is a complex yet essential process that requires careful planning and attention to detail. Employers should stay well-informed and seek professional support if necessary to ensure full compliance with legal requirements.

Mandatory Workplace Postings: Background, Updates, and Implementation Background

German companies are legally required to display certain laws prominently in the workplace to inform employees of their rights and responsibilities. This obligation applies to businesses with even a single employee. Key mandatory postings include the Minimum Wage Act, Working Hours Act, General Equal Treatment Act (AGG), and Works Constitution Act (BetrVG). Employers must ensure their postings are regularly updated, particularly in the event of legal changes.

Practical Implementation

• Posting Locations: Legal notices should be displayed in visible and easily accessible areas such as break rooms or entrance areas.
• Digital Access: Employees working remotely should be able to access relevant notices via the company intranet or digital display systems.
• Training and Awareness: Regular training sessions or informational meetings help keep employees informed about legal updates and their rights.

Key Mandatory Postings

• Minimum Wage Act (MiLoG): Regulations on minimum wage and working hours.
• Working Hours Act (ArbZG): Rules on working hours, breaks, and rest periods.
• General Equal Treatment Act (AGG): Protection against workplace discrimination.
• Works Constitution Act (BetrVG): Employee representation rights and co-determination.
• Youth Employment Protection Act (JArbSchG): Special regulations for minors in the workplace.
• Federal Data Protection Act (BDSG): Employees’ rights regarding data protection.
• Occupational Safety Act: Information on workplace safety measures and risk prevention.
• Collective Bargaining Agreements and Company Agreements: Must be displayed if applicable.
• Leave and Sick Leave Policies: Clear and accessible information on employee entitlements.

By consistently adhering to mandatory workplace posting requirements, companies promote transparency, ensure compliance with labor laws, and minimize legal risks.

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