Servus #25

April 2025

Table of Contents

• Outlook: The Coalition parties’ plans for pension insurance and occupational pension schemes
• The gender pay gap, equal pay and new regulations on transparency
• Effects of the Transparency Directive on occupational pension schemes
• Company occupational health insurance: a future-oriented benefit with tax-free advantages
• Significance of the policyholder status of a direct insurance policy

Outlook: The Coalition parties’ plans for pension insurance and occupational pension schemes

In the coalition agreement, the CDU, CSU and SPD have undertaken to address a number of issues relating to pension policy and occupational pension schemes. In the statutory pension insurance scheme, the state pension level is to be fixed by law at 48% until at least 2031. This is to be financed by tax revenues in order to avoid an excessive increase in pension contributions. It should also continue to be possible to retire after 45 years of contributions without being subject to deductions – this point had been the subject of much criticism and controversy in the past. The pension for mothers is to be expanded. Regardless of the year of birth, three pension points per child are to be credited. Previously, it was 2.5 for children born before 1992.

A so-called “active pension” is to be introduced. Individuals who reach the statutory retirement age and continue to work voluntarily would be entitled to receive their salary of up to EUR 2,000 per month tax-free. The aim is to create more flexibility for the transition towards retirement. Financial incentives are being offered to encourage people to voluntarily work longer, rather than raising the statutory retirement age. Moreover, the additional income options for surviving dependents’ pensions and the receipt of the basic old-age income support are to be improved.
In addition, a completely new “early retirement pension” is to be introduced. For every child from the age of six to 18 who attends an educational institution in Germany, ten EUR per month are to be paid into an individual, capital-funded and privately administered retirement savings scheme. The amount saved during this period can then be accumulated further by means of private contributions from the age of 18 until retirement.  The income from the savings account should be tax-free until retirement and the savings assets should be safeguarded from state access. A payout should only be possible when the statutory retirement age is reached. This early retirement pension model is already frequently being referred to as the “Merz pension”.

By contrast, the coalition agreement contains little concrete information on the subject of company occupational pension schemes. It generally emphasizes the desire to boost occupational pension schemes and to further promote their expansion, especially within SMEs and among low earners. To this end, low-income support is to be improved. In addition, company occupational pension provision is to be digitalized, simplified, made more transparent and less bureaucratic. Moreover, the portability of company occupational pension schemes in the event of a change of employer is to be made easier. 

By mid-term of the legislative period, a pension commission is to continue to examine the introduction of a new parameter for the overall pension level that covers all three pension pillars.

The gender pay gap, equal pay and new regulations on transparency

The gender pay gap describes the difference in hourly pay levels between women and men. After all: women often earn less than men – even for work of comparable value.

The adjusted gender pay gap is used in order to genuinely attribute this difference to an inequality in the treatment of the sexes, i.e. to a type of discrimination. In doing so, factors such as occupation, sector, working hours, qualifications and career level are factored out. Although these aspects do have a bearing on salary in structural terms, they do not have a direct impact on gender-specific discrimination. The adjusted gender pay gap therefore demonstrates how significant the difference in earnings still is, when women and men work under the same conditions. In all probability, the reason for this difference is therefore discrimination. (Website of the Federal Office of Statistics, https://www.destatis.de/DE/Home/_inhalt.html) (Page by Kienbaum, Gender Pay Gap – Analyzing and Eliminating the Pay Gap)

New EU Directive on Equal Pay

The EU directive on pay transparency dated June 26^th, 2023, intended to help reduce the pay gap between women and men. The rules must be adopted and implemented in accordance with German law by June 7^th, 2026. This means that companies must prepare for stricter requirements.

The following currently applies already: women and men should actually receive the same salary for the same work or work of equal value; they may not be discriminated against. The AGG (the General Equal Treatment Act) already takes precedence over the contractual freedom of individuals.
As things stand today however, it is not easy to prove a case of structural discrimination, thus making individual lawsuits more problematic. The new regulations improve the possibilities for action by means of greater transparency in the labor market, by reporting obligations and by providing solid judicial solutions:

What amendments are to be expected?

Salary transparency in job postings

• Employers must state the salary level of a position when advertising it.
• Questioning applicants about their previous salary during the selection process could be prohibited.

Right of disclosure of information for employees

• Employees may anonymously request information about average salaries within the company.
• This data is clustered according to gender and comparable activity.

Obligation to report on gender pay gap

• Objective: Companies with more than 100 employees must regularly publish information on the pay gap between women and men.
• Staggered implementation: Companies > 250 employees report annually and companies with 150 – 249 employees report every three years. Five years after the implementation deadline, companies with 100-149 employees must also submit reports every three years.

Joint review of salaries

• If there is an adjusted pay gap of more than 5% (as evidenced by the aforementioned reporting), the company must conduct a pay audit in conjunction with employee representatives.

As a consequence, in the future there will be a system that enables solutions for those discriminated against in terms of pay:

• Those who are discriminated against can receive compensation.
• Employers must prove that no discrimination has occurred (the burden of proof rests with the employer).  
• There are fixed sanctions for companies who discriminate and there is the option of collective action by those affected. (Page by Haufe, EU Directive for More Equal Pay | Staff | Haufe)

What does this signify for companies?

Companies should review their pay structures now and eliminate existing inequalities. In this way, they can ensure that they remunerate in a gender-neutral manner – and are robustly prepared for the new transparency regulations.

Effects of the Transparency Directive on occupational pension schemes

On 01.01.2025, new regulations for the Verification Act came into force as a result of the Fourth Bureaucracy Relief Act, which in particular introduced simplifications for the form of proof. Until now, employers have been obliged to provide written evidence of the essential contractual terms of the employment relationship, including the composition and amount of the components of remuneration, as well as the company occupational pension scheme. Written form means that the document must be signed by the employer and handed over to the employee. However, the relevant European Transparency Directive, on which the Verification Act is based, did not stipulate these strict formal provisions.

The new regulation, which came into effect on January 1, 2025, will in future create the possibility to alternatively drafting the essential contractual terms of the employment relationship in writing and transmit them electronically, provided that the relevant information is accessible to the employee, can be saved and printed out and provided that the employer requests the employee to submit proof of receipt with the transmission.  The new provision of the Verification Act is thus more closely aligned than in the past with the stipulations on written form in accordance with the corresponding EU Directive. In the future, pension schemes, deferred compensation agreements, insurance certificates, benefit plans, etc. can generally be provided in writing. However, it should be noted that certain sectors listed in the Act to Combat Clandestine Employment (including the construction, catering, commercial cleaning and freight forwarding) are excluded from these exemptions, as they are still subject to the stricter requirement for holding written records.

Company occupational health insurance: a future-oriented benefit with tax-free advantages

Company occupational health insurance (bKV) is an increasingly sought-after offer as a means for companies to attract and retain skilled workers in a competitive environment. As a supplementary insurance policy taken out by the employer for employees, it offers enhanced coverage to statutory health insurance (GKV) or it supports employees with private health insurance. Depending on the tariff, various services can be covered, such as quicker doctor’s appointments, better treatments or supplementary dental insurance.

There are two common models of occupational health insurance: the modular model and the budget model. In the modular model, the employer compiles various service modules from which employees can individually select the modules that suit them best. The budget model offers employees a fixed healthcare budget that they can use for healthcare services according to their needs.

The introduction of budget tariffs has in recent years established occupational health insurance as a modern and attractive solution. Employers are increasingly recognizing that providing healthcare for their employees not only promotes well-being, but also increases productivity and employee engagement within the company. In view of rising healthcare costs and longer waiting times in statutory health insurance, it is not surprising that an increasing number of companies are introducing occupational health insurance as a supplementary benefit.
Particularly amongst SMEs and larger companies, occupational health insurance has become an important tool in retaining and attracting employees. Smaller companies are also increasingly taking advantage of the tax-free non-cash benefit exemption limit of up to 50 EUR per employee per month.

Occupational health insurance underlines the company’s commitment to the health and well-being of its workforce and provides a competitive advantage in attracting new talent. Nevertheless, the penetration of occupational health insurance in highly competitive sectors still remains comparatively low.
For this reason, Profion recommends that companies who wish to stand out from the competition in a targeted manner, use a purely employer-financed combination of a company pension scheme (bAV) and occupational health insurance. In this context, the employer-financed company pension scheme remains the key instrument for employee retention and recruitment – the “new normal”. When combined with occupational health insurance, companies can position themselves significantly above the standard benchmark and offer their employees real added value, which leads to greater employer attractiveness and employee retention.

While the occupational pension scheme represents a long-term provision measure, the occupational health insurance supplements the overall benefits package with valuable health benefits, thus creating a holistic advantage for employees.

It is important to note that health related queries should be avoided at all costs when introducing an occupational health scheme, which is why this offer generally only makes sense for employee group sizes of 10 or more in order to minimize the administrative effort and potential risks.

If you have any queries or need further information, Profion will be pleased to assist you.

Significance of the policyholder status of a direct insurance policy

A recent ruling by the Baden-Württemberg State Social Court (LSG) on November 25, 2024 (case no. L 4 KR 1262/21) shows how crucial it is to precisely clarify the policyholder status within the insurance term history.

Background to the case

During the term of the insurance, various financing and policyholder constellations arose:

1. The direct insurance was initially financed by the employer as the policyholder.
2. Later, the employee took over responsibility for the premium payments, whilst the employer remained as the policyholder.
3. Finally, the employee herself became the policyholder, but maintained the insurance on a non-contributory basis.

When the lump-sum payment from direct insurance was paid out in 2020, the question arose as to which parts of it were subject to the obligation to pay contributions. The LSG Baden-Württemberg ruled as follows:

1. Any surpluses from the period of non-contributory coverage are not to be treated separately, i.e. these surpluses are also taken into account when calculating contributions.  
2. The obligation to pay contributions for lump-sum benefits, which has been in force since 2004, shall apply retrospectively.
3. The obligation to pay contributions also applies to benefits relating to periods during which the employee paid contributions, and the employer was the policyholder.

Significance from a practical perspective

For employers:
Employers are obliged to report changes in the beneficiary ownership (§ 5(2 LStDV). This is relevant, for example, if employees continue direct insurance with private contributions during parental leave. If the mandatory notification is not made, the employee may be subject to double taxation.

For employees:
An unclear policyholder status can lead to benefits unexpectedly being subject to compulsory contribution payments.

Our service for you:
We provide both employers and employees with comprehensive information on the possible consequences of a change in the status of policyholder or beneficiary owner. In this way we provide legal certainty and help avoid unpleasant surprises.  

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