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EXPLAINED: How can my German employer contribute more to my pension?

Germany’s pension system rests on three pillars – a state pension, anything private you've set up for yourself, and extra contributions your employer might make as part of your company savings plan. Here’s how it works if your workplace is topping up your pension.

Published: 29 January 2024 15:19 CET
Updated: 3 February 2024 08:25 CET

EXPLAINED: How can my German employer contribute more to my pension?

Employer pension plans in Germany - for those who have access - can give substantial benefits in retirement on top of a state pension. Photo: Pixabay

If you’re looking at taking a job in Germany, one of the benefit schemes to look into is the degree to which your would-be employer will top up your pension.

So called “occupational pensions” are an important element of Germany’s “three-pillar” pension system.

The first pillar – or a state pension – is financed mainly through mandatory joint employer and employee contributions that automatically come off your payslip every month. If you’ve worked in Germany for at least five years, you’re entitled to one once you reach retirement age.

The third pillar is entirely privately financed if someone chooses to put away extra money through such a fund.

The second pillar, however – or extra employer contributions to a separate occupational pension (betriebliche Altersvorsorge, or bAV) – can both provide you with more in your nest egg and some attractive tax benefits.

How common is occupational pension insurance in Germany? How does it work?

About 18 million people working in Germany – just under 40 percent of the total labour force – are currently eligible to contribute to an occupational pension scheme. That’s on top of what they pay into their state pension and alongside any private pension provision they may have.

In these arrangements, employers typically make extra pension contributions into an account with an established pension insurance fund. Some employers may even run their own fund. The employer pays into the employee’s pension account with this fund until the employee either retires or leaves the company.

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Almost 40 percent of people working in Germany can make pension contributions on top of their state pension, through company plans. Photo: Markus Spikse/Unsplash

Almost all large companies in Germany have a relationship with an occupation pension fund or have their own plan, with more and more smaller SMEs coming onboard all the time.

How much will the employer top my pension up by?

This varies.

That’s because management will typically agree to the terms of occupational pension contributions with the employee works council via a collective agreement – which requires both sides to negotiate and agree on the terms, including voluntary contribution amounts.

If the company doesn’t have a works council, management typically negotiates these terms with each employee individually. The company then in turn makes an agreement with the pension fund – if they have a relationship to one. Any agreement between a pension fund and a German company must also, by law, have a provision for what happens to the dependents of an occupational pension recipient – for example, if partners are entitled to a widow’s pension.

Are there tax benefits for me?

Employees also have the option of making an additional contribution on top of that made by their employers, typically to a maximum of €520 a month.

If you choose to do this, this money flows into the pension fund tax-free. You of course, pay tax on income you draw from the pension fund when you draw it out, either when you leave the company or reach retirement age.

What happens if and when I leave the company?

Occupational pension plans may not end up making sense for people who change jobs a lot, as any money that is saved ends up sitting around until you reach retirement age. You can request it to be returned to you – provided the amount is modest. However, if you do so, you’ll need to pay tax on what’s paid out to you.

EXPLAINED: Do your pension contributions abroad count in Germany?

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The best-paid jobs you can get without a university degree in Germany

One of the reasons so many people decide to move to Germany is to take advantage of the healthy jobs market and decent salaries. In 2024, the average worker in the Bundesrepublik was taking home €51,900 per year before tax, and in many sectors the average is even higher.

But if you don’t have a university degree or professional qualification, you may feel like you’re limited to jobs at the bottom of the ladder and doomed to take a lower salary than you’re worth.

But there are plenty of fields with high earning potential that have relatively low barriers to entry. Which is good news for many, considering that the number of school drop-outs is rising in Germany.

Here are some of the best-paid jobs you can find in Germany that don’t require endless years of studying or training.

Real estate agent

If you think you can sell anything to anyone and love the idea of closing big deals, becoming a real estate agent – or realtor in American English – could be the way to go.

This varied job involves advising and supporting your clients in their search for a dream property, hosting viewings, creating advertising materials and contracts and ensuring all the relevant transactions go through. It’s ideal for anyone with good attention to detail and warm, sociable personality.

A miniature house with new house keys.

A miniature house with new house keys. Photo by Tierra Mallorca on Unsplash

There’s no special training or qualification required to become a real estate agent, but in Germany you do need to apply for a licence known as a Maklererlaubnis to start practising.

Once you get going, you can earn between three and seven percent commission on the sale price of each property you sell. Of course, you final salary will depend on your success rate and the property market in your area, but Stufyflix puts the average at around €3,930 per month.

U-Bahn or tram driver

Though you may not notice them most days, public transport drivers keep life moving in German cities – and they tend to be pretty well remunerated as well.

Generally, you’ll be responsible for working shifts driving trams or U-Bahns around the city, helping people get from A to B and responding appropriately in the case of an emergency.

A big advantage of moving into this profession is that you generally only need around B1 or B2 German: it’s more important to hold a driving licence and show a willingness to learn.

Another great thing to note is that these jobs are heavily unionised. Many tram and bus drivers will tell you that it’s no easy job, but at least you’ve got a union fighting to improve your pay and conditions.

For people looking to change careers, the good news is that the initial training only lasts around six months, and you’ll earn a liveable salary between €2,100 and €2,800 during this period.

After that, salaries depend on location but tend to average around €40,000 per year, with bonuses for working nights, weekends and public holidays.

Software developer

With average salaries around €5,800 per month, the IT sector is one of the most lucrative fields in the German job market.

The best part is, you don’t need a degree in computer science to get a job as a programmer in today’s market. In fact, many start-ups are happy to offer jobs – with generous starting salaries – to self-taught programmers or people who have graduated three-month bootcamps.

If you’re currently unemployed, many of these fast-track courses are paid for by the job centre, so you can learn to be a software developer completely for free. Otherwise, there are plenty of online courses you can take on websites like Udemy or books you can buy to learn languages like C+, Python and Ruby at next to no expense whatsoever.

Carpenter

Though carpenters do generally need one or two years of training, the great thing about this type of hands-on field is that you can enter as an apprentice and get paid to work while you train.

There are several different types of carpentry, from building shelving units for industrial buildings to erecting the bare bones of a residential property.

A carpenter sands down a block of wood in Cologne. Photo: picture alliance/dpa | Federico Gambarini

Asking friends and colleagues to recommend a trustworthy builder is a good option. (Photo by Nasim ISAMOV / AFP)

If you’re good with your hands, love being physical active and overcoming technical challenges, carpentry could be a great career for you – and the money’s nothing to sniff at either.

Once qualified, the average carpenter in Germany earns around €43,700 per year, but this can rise to as much as €52,000. And with Germany battling a severe shortages of skilled carpenters, salaries are bound to keep rising in the coming years.

Administrative assistant

If you’re someone who likes to stay organised and presentable, then moving into a career as an administrative assistant could be the ideal move for you.

Though the specifics of the job depend on the company, most administrative assistants spend their days making sure everything in the office ticks over as it should, answering the phone, distributing memos, organising appointments, preparing reports and carrying out other important administrative tasks. In Germany, of course, you may also need to be proficient in the use of a fax machine.

Though there’s no formal qualifications or training required to become an admin assistant, you’ll need to show you have the qualities and skills required, including good organisation, excellent communication skills, the ability to multitask and strong attention to detail.

According to jobs portal WorkerHero, administrative assistants earn an average of €41,730 per year in Germany, but if you end up as a personal assistant to a high-powered corporate executive, the pay can go much higher.

Bank clerk

If you’ve got a good head for numbers and enjoy offering advice and assistance, transitioning into banking could be a sensible – and lucrative – career move.

Generally, you’ll need to do a traineeship with a bank to break into this field, but no degree is required – and once in there are good chances for progression.

Interestingly, the banking sector is one area of the economy where skilled workers are desperately needed, so get your foot in the door now and you’ll be in a great position to negotiate salaries later.

A sign for Postbank, one of the major banks in Germany.

A sign for Postbank, one of the major banks in Germany. Photo: picture alliance/dpa | Marijan Murat

According to job search portal Indeed, the average bank clerk in Germany earns a very respectable €45,500 per year, but that can go up depending on the bank you work for and your specialisms.

If you work your way up the ladder, the pay goes up incredibly quickly, with some bank managers earning as much as €75,000 per year.

Events planner

Though events planning is no easy ride, it can be a huge buzz for people who thrive under pressure and enjoy the satisfaction of pulling off a dream wedding or a major corporate event.

People with impeccable organisation skills, a sociable attitude and naturally elegant taste will find themselves well-suited to this career, and the best part is that no formal qualifications are needed – though taking a short course could help you learn the ropes faster.

Once you’re underway and working with clients, the sky’s the limit to how much you can earn: some of the best paid wedding and events planners earn as much as €100,000 per year.

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