With all employers in Germany, you have the option of agreeing a so-called defered compensation into direct insurance contributions. Some employers provide you eiththe wealth-related benefits (often in the amount of EUR 40.00) as a subsidy.
For employees with an annual gross wage up to the current contribution assessment limit (Beitragsbemessungsgrenze) the employer renders another subsidy in accordance with the occupational pension strengthening law (Betriebsrentenstärkungsgesetz).
Tax conversion and, if applicable, social security benefits are associated with deferred compensation which are used to build up your important retirement provision (Altersvorsorge). You can improve your retirement benefits from taxes that are normally lost with very lillte own expense.
In total, you can use up to 4% of the current contribution assessment limit (in 2020 this is 276€ per month) as a gross contribution to direct insurance.
This is how your gross salary for direct insurance could compose:
With a monthly contribution of 276.00€ (including 36.00€ company pension strengthening law subsidy from the employer) for your direct insurance, you will achieve tax savings of 72.98€ as well as social security savings of 48.18€. In addition, you can use the noe free of charge VL services (40.00€).
Your net expenses for company pensions is therefor only 78.84€.
(Note: Calculation based on a monthly gross salary in the amount of 3,500€ - Unit III)