Mandatory Contribution Obligations of Employers Regarding bAV

The bAV, a method for employees to convert parts of their salary into retirement provisions, is undergoing some significant changes. Here's a breakdown of what these changes mean for employers and employees.

Previously, employers benefited from salary conversion in the bAV, as they could save a part of the payroll ancillary costs. However, this requirement applies to both new and old contracts, with the regulation regarding payroll ancillary costs for the bAV only applying to new contracts since 2019.

From January 1, 2022, employers are legally required to pass on saved payroll ancillary costs from the occupational pension scheme (bAV) to employees. This means that starting from next year, 15 percent of the payroll ancillary costs will go directly into the bAV of the respective employee for all contracts, not just new ones.

The aim of these changes is to make company pensions more attractive for employees, with employer contributions intended to enhance this attractiveness. However, from 2022, employers will have to pass on a large part of the savings from the bAV to employees.

Employers should review their bAV promises now to ensure compliance with the new law in 2022. Failure to review these promises may result in liability risks for employers, including lost interest payments and reduced pension claims. Tino Weissenrieder, the managing director of W&K Wirtschaftsberatung in Lahr, an independent insurance broker offering comprehensive financial and insurance advice, emphasises the importance of advance preparation.

W&K Wirtschaftsberatung has been operating independently since 2010 and, in cooperation with Honorarfinanz, also offers fee-based financial advice for selected professional groups. Weissenrieder assures employers that they do not have to worry about high back payments due to this regulation change.

It's worth noting that employees with company pension scheme promises (bAV) that were outdated and not reviewed or updated before January 1, 2022, can expect repayments starting in 2022. This underscores the importance of timely review and update of bAV promises.

In conclusion, the changes to the bAV regulations are designed to make company pensions more attractive for employees, with employers playing a crucial role in ensuring compliance and avoiding potential liability risks. Employers are advised to have their bAV promises reviewed in advance to avoid potential later payback of payments.