Expansion of Occupational Pension Benefits for Additional Workers

The German government has approved a new law, the "Second Occupational Pension Strengthening Act," with the aim of increasing the number of people benefiting from occupational pensions, particularly those with low and medium income. This act, proposed by Social Minister Bärbel Bas and Finance Minister Lars Klingbeil, is scheduled to take effect from January 1, 2026.

The law is designed to firmly establish occupational pensions as a key second pillar alongside statutory pensions. It aims to remove barriers and create incentives for broader adoption, especially in small and medium-sized companies and low-income workers.

One of the key measures is the facilitation of opt-out systems for occupational pensions, allowing automatic use of remuneration for pensions unless objected. This is expected to make it easier for employers to offer occupational pensions, particularly for smaller companies.

Another significant change is the expansion of the social partner model, which will further develop the existing model for negotiating occupational pensions. This model, considered efficient, secure, and especially beneficial when organized collectively by social partners, is expected to encourage more companies to offer occupational pensions.

The law also aims to address the gaps in the distribution of occupational pensions, particularly among smaller companies. To do this, it will make it easier for these companies to offer occupational pensions, for example through works agreements.

In addition, the pension fund regulations are to be made more flexible, and the tax promotion of occupational pensions is to be increased. This is expected to make occupational pensions more attractive to both employers and employees.

However, not everyone is in agreement. Michaela Engelmeier, head of the German Social Association, criticizes the three-pillar model, stating that it has failed. Instead, she calls for the statutory pension to secure the standard of living again.

Despite employment growth, the number of people with active occupational pension entitlements slightly decreased, with the distribution rate falling to 52%. This is a concern that the law aims to address.

The government views good occupational pensions as a means of ensuring a good quality of life in old age. Finance Minister Lars Klingbeil describes occupational pensions as an important pillar alongside the statutory pension.

The law will be discussed in the Bundestag and Bundesrat in the coming weeks, with implementation scheduled for January 1, 2026. Online voting is to be expanded in social elections, following a successful pilot project in 2023, with over 330,000 members of five statutory health insurers participating.

The government has already proposed a draft for the statutory pension, which aims for a stable pension level until 2031 and better pensions for millions of mothers. From 2027, the pension contribution is set to rise from 18.6% to 18.8% due to the aging of society and improvements in pensions.

The coalition aims to pass this bill in the Bundestag by the end of the year, with improvements to be funded by tax money. This move is expected to significantly increase the number of people with active occupational pension entitlements, ensuring a more secure retirement for many Germans.