Compulsory Contribution to bAV Obligations for Employers: Key Points to Understand

News Article: Changes to Occupational Pension Schemes (bAV) Affecting Employers

W&K Wirtschaftsberatung, an independent insurance broker, has been providing fee-based financial advice to selected professional groups since 2010. The company cooperates with Honorarfinanz to offer comprehensive advice and support in financial and insurance matters.

One of the key areas of focus for W&K Wirtschaftsberatung is the occupational pension scheme (bAV). The scheme, which involves converting parts of salary through salary conversion, is undergoing significant changes.

From January 1, 2022, employers are obligated to pay contributions to the occupational pension scheme (bAV) for existing old contracts, even if the employee does not contribute. This change is intended to make bAV more equitable for employees. From 2022, employers must pass on a large portion of the savings from bAV to employees. The savings passed on to employees from 2022 are intended to help employees prepare for retirement.

The legal obligation for existing contracts does not apply retroactively before January 1, 2022. However, from January 1, 2022, the obligation to pass on bAV savings to employees applies to existing contracts as well, not just new ones.

Employers should be aware of the potential financial implications of not reviewing their bAV commitments. The new regulation may require employers to pay back payments if they do not comply with the requirements. To avoid potential back payments due to missed contributions, lost interest, and reduced pension claims, employers are advised to review their bAV commitments.

Prior to 2022, employers could save a portion of payroll costs due to salary conversion in bAV. However, under the new legal framework, mandatory employer contributions to bAV are intended to make company pensions more attractive for employees.

Every employee can use bAV to prepare for retirement through their employer. The regulation states that 15 percent of payroll costs for contracts concluded since 2019 go directly into the bAV of the respective employee.

Tino Weissenrieder, the managing director of W&K Wirtschaftsberatung, emphasises the importance of compliance with the new regulation. He advises employers to seek professional advice to ensure they are in line with the 2022 requirement.

In summary, changes to the occupational pension scheme (bAV) mean that employers are now obligated to pay contributions for existing contracts and pass on a significant portion of the savings to employees. Failure to comply with these changes could result in financial penalties, including back payments, lost interest, and reduced pension claims. Employers are encouraged to review their bAV commitments and seek professional advice to ensure compliance with the new requirements.