Company Pensions in 2026: What the New Company Pension Strengthening Act Means for Employers and Employees

For many employees, a company pension plan is an important supplement to the statutory pension—and for employers, it is an effective tool for attracting and retaining skilled workers. Nevertheless, small and medium-sized enterprises in particular have so far been less likely to offer their employees a company pension plan than large companies. The Second Occupational Pension Strengthening Act (BRSG II) aims to change that. It simplifies access, expands funding opportunities, and creates more flexibility in design. We summarize the most important changes.

Social partner models can now be used across industries

Since 2018, occupational pension plans have included what is known as a “defined contribution plan.” Under this model, the employer commits solely to paying a fixed contribution to a pension provider without guaranteeing a specific pension amount. This model requires a collective bargaining agreement between employers and unions and is therefore referred to as a social partner model.

Until now, the use of such models was essentially limited to the respective collective bargaining sector. The BRSG II now opens these structures to companies outside the sector as well. Specifically, this means: If a union is responsible for a specific employment relationship according to its bylaws, employers and employees can use an existing social partner model of that union—even if they themselves belong to a different sector. The prerequisite is that the collective bargaining provisions are adopted in full, including the employer contributions specified therein.

For smaller companies that previously had no access to such pension schemes, this opens up new opportunities to offer their employees a company pension secured by a collective bargaining agreement.

Automatic deferred compensation even without a collective bargaining agreement

Another lever for expanding occupational pension coverage is the so-called option system. Under this system, employees are automatically enrolled in a deferred compensation plan unless they actively opt out. This principle lowers the barrier to entry and, based on experience, leads to significantly higher participation rates.

Until now, the introduction of such systems was generally tied to a collective bargaining agreement. The BRSG II now allows companies not bound by collective bargaining agreements to introduce option systems via a company agreement—provided the employer contributes at least 20 percent of the deferred compensation as a subsidy.

Better protection during career breaks

Those who temporarily interrupt their professional activity—for example, for parental leave, a sabbatical, or due to prolonged illness—previously had to accept potential disadvantages when building up their company pension. Starting July 1, 2026, an expanded right to continue coverage will apply: A life insurance policy taken out by the employer in the employee’s name may be continued under the existing terms following any unpaid leave, provided the employee requests this upon returning to work. Until now, this right was limited to returning from parental leave.

Company pensions and partial pensions can be combined in the future

Those who wish to retire gradually and therefore initially receive only a partial pension from the statutory pension insurance faced a problem until now: In many cases, the occupational pension could only be paid out once a full pension was being received. Starting January 1, 2027, this restriction will be lifted. The occupational pension can then be claimed regardless of whether the statutory pension is received as a full or partial pension. This makes the gradual transition to retirement significantly more attractive.

Higher subsidies for low-income employees

The legislature provides financial support to employers who make additional occupational pension contributions for low-income earners. This so-called occupational pension subsidy is deducted directly from payroll taxes and amounts to 30 percent of the additional employer contribution paid. The annual minimum contribution is 240 euros, and the maximum subsidized contribution is 960 euros per year. Low-wage earners are defined as employees with a gross monthly salary of no more than 2,575 euros—this limit remains in effect until the end of 2026.

Especially for industries with a high proportion of low-wage workers—such as skilled trades, the restaurant industry, or retail—the subsidy provides a financial incentive to enable employees to establish additional retirement savings.

About Trimborn . Partner

Trimborn . Partner is a multi-award-winning tax consulting and auditing firm with offices in Düsseldorf and Oberhausen. As experienced tax advisors for small and medium-sized businesses, we assist companies, freelancers, and private individuals with all matters related to payroll accounting, corporate pension plans, and tax incentives. If you would like to learn about the opportunities the BRSG II offers your company or how you can optimize existing corporate pension plans, our tax advisory experts in Düsseldorf and Oberhausen are happy to assist you.