Company Pension Strengthening Act II 2025/2026
Draft bill dated July 25, 2025
Current status
The adoption of Company Pension Strengthening Act II (BRSG II) was delayed in 2024 due to the collapse of the coalition. A new draft bill is now available. The bill has now been reintroduced in the new legislative period.
Key content of the current draft of the BRSG II
The content of the current BRSG II draft is identical to last year’s draft in many respects. The new BRSG II draft 2025 brings the following changes:
Extended severance pay option
- The severance payability of legally vested entitlements after leaving the company doubles with the employee’s consent if the entitlements are paid into the statutory pension insurance. The higher limits are 2% (pension) and 24/10 (capital) of the monthly reference amount according to Section 18 of the German Social Security Code IV (SGB IV).
- Our assessment: Unfortunately, the requirement to pay the severance pay amount into the statutory pension insurance scheme is still too bureaucratic and too costly.
Partial pension in the statutory pension insurance is sufficient for early receipt of the company pension
- Company pensions can also be drawn early if a partial pension is drawn in the statutory pension insurance scheme. The reason for this is the elimination of additional income limits for early retirement pensions in the statutory pension insurance.
- Our assessment: We expect that this regulation will lead to many questions and, if necessary, a need for companies to establish regulations with regard to continuing to work while simultaneously receiving occupational pensions. The issue will become much more complex in the future.
Opting-out models
- In future, option systems should be able to be regulated by works agreements without a collective bargaining basis if remuneration entitlements are not regulated by collective agreements and are not usually regulated in a relevant collective agreement, and the employer grants a subsidy of at least 20% of the employee’s contribution to the pension scheme.
- Our assessment: Very limited scope of application, as most industries regulate remuneration by collective agreement. The increased subsidy obligation of at least 20% of the converted remuneration makes opting out unattractive for many employers.
Changes to the Social Partner Model (SPM)
- Application of a relevant collective agreement by employers not bound by collective agreements with the consent of the parties to the collective agreement supporting the SPM
- Application of a non-relevant collective agreement is possible with the consent of the parties to the collective agreement supporting the SPM; the collective agreement must provide for this, or the trade union supporting the SPM must be responsible for the employment relationship under the collective agreement
- Settlement of entitlements and current benefits deviating from Section 3 of the Company Pension Act is also possible in the SPM
- Our assessment: The draft continues to focus on strengthening the SPM, in particular by including employers not bound by collective agreements, but remains complicated to implement.
Improvement of support for low-income earners, Section 100 Income Tax Act
- The income limit is changing to 3% of the Social Security Ceiling (pension insurance for west Germany) and thus increased (from EUR 2,575 to currently EUR 2,628). The maximum eligible amount is increased from EUR 960 to EUR 1,200 per year. The new maximum subsidy amount is therefore EUR 360 (previously EUR 288) per year.
- Our assessment: The effective date of the improvement should be brought forward. An improved subsidy percentage (from 30% to at least 40%) would increase the attractiveness for employers and improve the spread of occupational pension schemes among low-income earners; opportunities are being missed here.
Extended right to continue after unpaid leave
- The option to continue direct insurance based on salary exchange is being extended to all periods without pay — previously only possible for parental leave.
- Our assessment: A sensible addition.
Long-term savings accounts
- Exemption through use of credit balance and receipt of early retirement pension from the statutory pension insurance is possible until reaching the standard retirement age – no disruption occurs. Not applicable to cases of partial retirement.
- Our assessment: Basically a sensible clarification.
In addition, the draft provides for a whole series of further regulations. These include, for example, the digitization of work processes at the Pensions-Sicherungs-Verein a. G. (Pension Security Association) and various regulations on pension funds and pension schemes.
What are the next steps?
The professional associations – including the working group for occupational pension schemes (aba)– have submitted their comments on the draft bill to the Federal Ministry of Labour and Social Affairs (BMAS). In these comments, they call for, among other things, the standardization of the funding limits under Section 3 No. 63 of the German Income Tax Act (EStG), the abolition of double contributions, and adjustments to guarantees in defined contribution plans with minimum benefits (BZML) and defined contribution plans (BOLZ).
However, it is considered unlikely that these points will be taken into account in the further proceedings. Similar demands were made as early as 2024, but they were not incorporated into the draft. Therefore there is much to suggest that the federal government intends to push the BRSG II through the legislative process in its current form.
The next step in the legislative process after the parliamentary summer recess will be the cabinet decision on BRSG II. The draft bill will then go through the parliamentary process.
The BRSG II is scheduled to come into force on the day after its promulgation. By way of derogation, the provisions on partial pensions (Section 6 BetrAVG) and on the extension of the right to continuation after a period of unpaid leave are to come into force on July 1, 2026, and the improvements to support for low-income earners on January 1, 2027.
We will keep you up to date on all changes in the BRSG II 2025/2026 so that you are informed in a timely manner about new obligations and opportunities in occupational pension schemes.
Contact us for your personal consultation.