Company pension schemes: Bundestag passes Second Act Strengthening Company Pensions

On 5 December 2025, the Bundestag (finally) passed the Second Act Strengthening Company Pensions (Betriebsrentenstärkungsgesetz II, BRSG II). The aim of the BRSG II is the necessary expansion of company pension schemes in Germany and it contains important new regulations. The Act will come into force in several stages from 1 January 2026. The most important points are summarised here.

Following lengthy deliberations, which were also delayed by the new Bundestag elections, the Bundestag passed the BRSG II on 5 December. In particular, the Act includes options for introducing opting-out systems at company level, higher settlement caps for vested pension entitlements with and without the employee's consent, the easier participation of "third parties in social partner models" and more flexible coverage requirements for pension funds. In the course of the BRSG II, the temporal scope of application for using up credit balances (Section 7c of the German Social Code Book IV [Sozialgesetzbuch IV, SGB IV]) has also been further expanded.

The main changes are presented in order below:

Opting-out systems

With the BRSG II, the federal legislature is at least attempting to facilitate the introduction of opting-out systems for the automatic deferral of remuneration at the company level. In this respect, the parties within the company should in future and under certain circumstances be able to introduce an opting-out system by means of a shop agreement or service agreement "even without a collectively bargained basis".

The legislative implementation in the BRSG II takes the form of a new paragraph 3 to be inserted into Section 20 of the German Company Pensions Act (Betriebsrentengesetz, BetrAVG). The new paragraph 3 links an opting-out system without a collectively bargained basis to the fact that remuneration claims are not regulated, and are not customarily regulated, in a relevant collective agreement. In view of the reservation of customary practice, the practical effect of this is doubtful.

Settlement caps for vested pension entitlements

Practitioners have long since agreed that so-called marginal vested company pension entitlements place an administrative burden on companies and do not really provide improved retirement security for employees.

Here, the BRSG II will in future create easier settlement options for vested company pension entitlements with and without the employee's consent:

• Companies can now settle vested pension entitlements without the employee's consent if the monthly amount of the ongoing payment resulting from a pension entitlement upon reaching the specified age limit does not exceed 1.5 percent, or in the case of lump-sum payments eighteen-tenths of the monthly reference amount pursuant to Section 18 SGB IV.
• In future, companies will also be able to settle vested pension entitlements at twice the previous amount with the employee's consent if the settlement amount is used "directly to pay contributions to the statutory pension insurance scheme”.

Social partner models for "third parties"

Sections 21 et seq. of the BetrAVG regulate the so-called social partner model, which is characterised by what is a pure defined-contribution scheme as the form of commitment and significantly fewer obligations on the part of the company under the BetrAVG (Section 1 (2) no. 2a BetrAVG). The further development is intended in particular to enable the participation of employers and employees not bound by collective agreements as third parties.

The BRSG II introduces a new Section 24 BetrAVG, which postulates the "participation of third parties in social partner models" in its heading. The new regulation enables companies and employees to mutually agree on the application of a relevant social partner model. In addition, the applicability of a non-relevant social partner model can be agreed upon by the parties to the employment contract if this is permitted by a collective agreement that is relevant to the employment relationship or if the trade union deciding on the social partner model has the collective bargaining competence over the employment relationship according to its statutes. It is also crucial that the participation of these third parties requires the consent of the parties to the collective agreement supporting the social partner model.

Whether and to what extent the above accessibility of social partner models will lead to the envisaged expansion of company pension schemes is now the subject of a statutory evaluation to be carried out in 2027 by the Federal Ministry of Labour and Social Affairs (Section 30a BetrAVG, new version). If the number of employees participating in a social partner model has not doubled by then compared to 2025, the Federal Government must propose appropriate measures to the legislative bodies by 31 March 2028 to give all companies and their employees access to a social partner model.

Dissaving of credit balances until the standard retirement age

With the addition of Section 7c (1) sentence part before number 1 ("until the end of the calendar month in which the standard retirement age according to the Sixth Book is reached "), the federal legislature has clarified the maximum period of application.

This clarification is not a legislative end in itself, but should be read in conjunction with the addition in paragraph 1, number 2, letter a ("or beyond, at the latest until the end of the calendar month in which the standard retirement age according to the Sixth Book is reached"). Rather, for the first time, it creates the possibility of dissaving credit balances even whilst claiming a full or partial old-age pension from the statutory pension insurance scheme until the end of the calendar month in which the standard retirement age according to the SGB VI is reached. The amendment should be understood in the context of the new regulations on additional income that came into force at the beginning of 2023, which are intended to make drawing a pension more flexible and, in particular, to create incentives for older people to work longer. This would be counteracted if a credit balance already had to be dissolved at the time of claiming an early retirement pension. The legislator has now clarified this.

Conclusion

The new BRSG II reveals the legislative intention to strengthen company pension schemes as a key pillar for securing living standards in old age in the future. However, the "accessibility" of opting-out systems is unlikely to have any practical effect, as almost all remuneration entitlements are customarily regulated by collective agreements. The increased settlement caps are a cautious start to the long-overdue reduction in administrative costs. The introduction of the evaluation of social partner models in 2027 offers at least some cause for optimism. The Bundesrat has yet to approve the BRSG II.

We would be happy to assist you with any questions you may have about company pension schemes.

Moritz Coché and Jörn Kuhn

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