Effective retirement provision from your employer during your time in Germany – with tax advantages and an employer subsidy

As in almost all other countries, statutory pension provision in Germany will be subject to continuous reductions in the future. In many countries, the state pension is already not sufficient to ensure an adequate retirement age. Effective and long-term provision is most effective if it is started as early as possible.

As an employee of Mister Spex in Germany, you have the statutory right to a pension through your employer. So-called direct insurance is the optimal solution to build up additional income for your retirement.

The German state supports this so-called occupational pension scheme and enables you to build up a lucrative additional pension by using tax advantages and an employer subsidy.

Participation is also attractive for foreign Mister Spex employees, as there are clear advantages, even if you are only in Germany for a few years.

Please contact us for a personal Google Meet, you will find our contact details on the right.

Your advantages

As much as a €579.60 Mister Spex subsidy per year. Mister Spex subsidises 15% of your pension scheme, maximum €579.60 per year.
State support through savings. Each month there is a tax saving which increases the performance of your scheme.
Attractive special conditions. Higher cost benefits for better performance from market leading pension providers.
Attractive also for foreign employees. Attractive conditions even over a duration of a few years.

How should
we proceed?

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Questions and answers

Getting older – a financial risk?
The number of pensioners is increasing. At the same time, there are even fewer people making contributions to statutory pension schemes – in the long term this is a problem. Getting older In the case that future statutory pension insurance has even lower returns, the balance, or lacking funds, need to be made up by each person taking personal responsibility. Laws have been created to establish a so-called direct insurance/deferred compensation scheme using tax advantages and employer subsidies.
How does direct insurance work?
  • Direct insurance is a pension scheme that your employer organises for you at your request. Right from the start, you have a legal right to enrole for these services. Among other things, you can take the contract and carry it on if you change employer.
  • You make an agreement with your employer that you wish to convert part of your income into contributions for so-called direct insurance. If your employer saves on their social security contributions as a result, you are then generally entitled to a statutory subsidy. Mister Spex employees receive up to a monthly €48.30 subsidy (€579.60 yearly) on the deferred amount.
  • The contributions are deducted from your gross income and are paid directly to the insurer along with the tax savings, your own contribution and the Mister Spex subsidy which all together will support the growth of your insurance scheme.
  • A large part of your retirement provision is financed by tax savings and social security contributions – that makes this type of pension scheme particularly lucrative.
How
How much can I pay in and which tax advantages can I avail of?
The contributions from so-called deferred compensation are tax-free up to 8% of the contribution assessment limit (€644 per month in 2025). Lump-sum taxed contributions according to § 40b EStG (old tax law for financial statements before 2005) are to be offset against this maximum limit.
Do I have to pay tax on the returns from the company pension at retirement age?
This pension benefit, like the returns from the statutory pension scheme, is taxable later. This is usually done at a lower tax rate. People with statutory health insurance also have to pay contributions towards a pension. The benefit lies in the subsequent (lower) taxation and, in addition to the employer’s contribution and state subsidies, it is a very reliable and effective way to safeguard yourself during retirement.
Do I also save on social security contributions?
Yes, with direct insurance, contributions of up to 4% of the income threshold (€322 per month in 2025) are exempt from social security.
How does the employer strengthen my contributions?
As of 01.01.2022, occupational pension law provides for a subsidy obligation of 15% by every employer (maximum €42.00 per month) if the salary is converted into so-called direct insurance. This deferred payment is made without social security. Mister Spex has been contributing the subsidy of 15% on the deferred amount for many years. This amounts to a maximum of €48.30 per month/€579.60 per year.
How does that pay off for me?
Pay Off
How flexible are my contribution payments?
Contribution adjustments are possible at your request at any time. This can be a reduction, an increase and, within the legal framework, additional payments.
What options are there in the event of a long illness, parental leave or sabbatical?
In so-called inactive or unpaid periods of work, the employer usually does not make any contributions to the company pension, as there is no income to offset. It is possible to continue paying the contributions privately in full or individually at a reduced rate. This takes place during this phase without any tax advantage and without an employer subsidy, but still serves to ensure that the maturity benefit is not reduced. If you have any questions about this, we will be happy to advise you and assist you in doing this in an appropriate way.
Can the direct insurance be lent out, transferred or suspended?
The company pension scheme cannot be transferred or lent out by either the employer or the employee. Early termination cannot be given by the employee. If no further payments are converted, the insurance contract is then usually continued free of charge for the benefit of the employee. The insurance payments are available from retirement, at the earliest after reaching the age of 62.
Do I get a regularly paid pension or a lump sum when contract expires?
Shortly before you retire, you make the decision whether you want to receive a lifelong pension in installments or have the entire capital paid out as a lump sum. Alternatively, you can also opt for a split between regular payments and a lump sum (lump sum max. 30%).
What happens if I change employer?
If you change company, the contract is carried forward and will usually be continued by the new employer. The contract framework or structure then depends on the new employer’s company pension requirements. We will accompany you during this process to allow ease of transition into the new contract. Alternatively, the contract can also be continued privately or paused.
What happens in the event of death?
If the insured person (employee) dies during the savings phase, i.e. before the start of retirement, the death benefit (the contractual credit accumulated up to that point) is paid out to the entitled surviving dependents. The amount of the death benefit is shown in the insurance policy. If the insured person dies while the pension is being drawn, the remaining capital at the time will be paid out to the surviving dependents. According to the pension commitment, the following persons are deemed to be surviving dependents: spouses, civil partners who manage joint household finances as well as their own and their adopted children.
Can I insure my workforce against disability?
Yes, that is possible, and it is also tax subsidized as well employer subsidized. With occupational disability protection, you protect yourself and your family from the financial risk of occupational disability.
Is there protection against unauthorised access when receiving Hartz IV or basic social security?
The assets built up under direct insurance are protected against liquidation. In the case you should ever have to claim unemployment benefit II or receive so-called basic social security, then pensions from an occupational pension are protected against access by third parties or have exemptions from existing tax free allowances.
What happens if my employer becomes insolvent?
Since third parties cannot access the contract balance in this situation the resulting benefits from direct insurance are therefore retained in the event of the employer’s insolvency.
Which costs arise?
The final costs as well as administration costs contained in the insurance contract will not be billed to you separately, but are naturally already included within the ongoing contributions and maturity benefits. All costs are highlighted in the insurer’s quote and, due to the existing contracts having been created as groups, this results in attractive price reductions which benefit all participants.
The afm team will gladly be on hand providing advice and assistance to you
Torben Gedaschko
Torben Gedaschko