Dear Sir or Madam,
In 2022, the next stage of the Occupational Pensions Strengthening Act, which has been in force since 2018, will come into force. We would like to inform you about this today.
As of January 1, 2022, an employer subsidy of 15%* of the conversion amount must be paid into an existing company pension plan (bAV) contract if:
- remuneration is converted in favor of a bAV (so-called remuneration conversion agreement)
- and social security contributions are saved as a result of the conversion
- and the payment is made to a pension fund, pension fund or direct insurance.
*The 15% is a flat-rate contribution.
The reason for the regulation is that the employer also saves social security contributions of approx. 20% through deferred compensation, although the employer does not participate directly in the payment of the contributions. After deducting a flat-rate administrative expense of 5%, the employer is to pass on this saving to the bAV contract at a rate of 15%.
It is also possible to pay at most the saved social security contributions as a subsidy (so-called acute settlement). However, we generally recommend paying a 15% subsidy, as this variant is less subject to errors and more transparent for employees, particularly with regard to unresolved legal issues relating to the calculation of social security savings, and also involves less administrative work.
The savings in social security contributions are regularly present if the employee's income is below the contribution assessment ceiling (BBG) for statutory health insurance (currently EUR 58,050 for 2022) and if the contracts are subsidized under Section 3 no. 63 p. 1 of Income tax Act are subsidized, i.e. payment of max. 4% from the BBG RV West (for 2022 currently EUR 84,600), which means per year EUR 3,384 (p. m. EUR 282).
For payroll accounting, there is therefore a need for action as follows:
As an employer, you must contact the employees and the pension provider with regard to existing contracts (this regulation has already applied to new contracts since Jan. 1, 2018) and clarify how the employer's allowance is to be paid.
The following variants are available:
- 15 % is to be paid in addition to the existing contract
- 15 % is to be paid into a new contract
- the total amount is not changed the existing deferred compensation agreement must be adjusted, this requires the express consent of the employees
--> if the total amount is not changed, you can choose between
- "From hundred": 85% of the total amount is converted into pay by the employees and 15% is paid in by the employer, in this case the true 15% allowance is not paid
e.g: Conversion of remuneration previously 100 EUR, conversion of remuneration new 85 EUR, bAV compulsory subsidy 15 EUR.
- "in hundred": real 15 % of the total amount is paid in (in this case the employer does not pay in one cent too much)
e.g.: deferred compensation up to now 100 EUR (corresponds to 115 %), deferred compensation new 86,96 EUR, bAV compulsory allowance 13,04 EUR.
Please note that we, as tax advisors, can only advise you in the context of income tax and social security law. Any consequences under employment law resulting from the changes should be discussed with a lawyer.
We will be happy to assist you in determining whether there are any savings in social security contributions with the currently existing contracts and how high these savings are. Please contact us in this regard.
If you have agreed on a variant with the employees and the pension provider has been contacted for the purpose of contract adjustments, please submit the adjusted contract documents to the responsible payroll administrator so that the data can be correctly entered into the payroll accounting software. If we do not receive adjusted contract documents, we will not be able to make any adjustments. We therefore ask you to submit them as soon as possible.