With an occupational pension (bAV) and health insurance, salary sacrifice works in two places: today through the ongoing contributions, and later when the company pension is paid out. This guide explains both effects with the rules that apply in October 2026.
Short answer: During the saving phase, salary sacrifice is free of social security contributions up to 4 percent of the contribution assessment ceiling (Beitragsbemessungsgrenze), which is 338 euros a month for 2026. It is tax-free up to 8 percent, which is 676 euros a month for 2026. Later payments from the company pension can trigger contributions to statutory health insurance (gesetzliche Krankenversicherung). For a lump-sum payment, a twelfth of the amount counts as the monthly figure, spread over 120 months at most. As of October 2026.
The key points in brief
- During the saving phase, salary sacrifice reduces the contribution base by up to 4 percent of the contribution assessment ceiling, because the converted amount is not subject to contributions.
- The contribution assessment ceiling of the statutory pension insurance is 8,450 euros per month for 2026 (as of October 2026). 4 percent of this (social security limit) is 338 euros, and 8 percent (tax limit) is 676 euros.
- Benefits from a company pension trigger contributions to statutory health insurance, to the extent that an allowance is exceeded.
- For a lump-sum payment, one hundred and twentieth of the benefit counts as a monthly amount, for 120 months at most (§ 229 SGB V).
- If you have private health insurance, these contributions generally do not apply to you. Premiums for private health insurance do not depend on your income.
What happens during the saving phase?
With salary sacrifice, part of your gross salary is not paid out to you but paid into your pension provision. Up to 4 percent of the contribution assessment ceiling, this part is free of social security contributions (§ 1 Abs. 1 Nr. 9 SvEV), and up to 8 percent it is tax-free (§ 3 Nr. 63 EStG). No contributions to health insurance are therefore due on the amount free of social security contributions.
Worked example. Assumption: you convert 200 euros per month. Your contribution-liable income then falls by this amount, and contributions to statutory health insurance are calculated on this lower base. The effect on your net salary is best checked with the income and contributions calculator of the Federal Ministry of Finance, because wage tax cannot be calculated as a flat rate.
What happens when the pension is paid out in old age?
Benefits from a company pension count as pension benefits (Versorgungsbezüge). Contributions to health insurance and long-term care insurance apply to them, at the general contribution rate plus the additional contribution. An allowance linked to the reference value (Bezugsgröße) protects smaller benefits (§ 226 SGB V). Contributions therefore only become due above this allowance.
A lump-sum payment follows a different rule. If a one-off benefit is paid instead of an ongoing pension, or if such a lump sum was agreed or promised before the pension event, one hundred and twentieth of the benefit counts as the monthly amount under § 229 para. 1 sentence 3 SGB V, for 120 months at most. The contribution burden is therefore spread over up to ten years. How high it turns out depends on the amount of the lump sum and the contribution rate.
Where is the difference between statutory and private insurance?
| Phase | Statutory health insurance | Private health insurance |
|---|---|---|
| Saving phase, free of social security contributions up to 4 percent of the contribution assessment ceiling, tax-free up to 8 percent | No contributions on the amount free of social security contributions up to 4 percent | No effect on the premium, the tax advantage remains |
| Pension from the company pension | Contributions above the allowance at the general rate plus the additional contribution | As a rule, no contributions from the company pension |
| Lump-sum payment | Spread over 120 months, one hundred and twentieth each | As a rule, no contributions from the lump-sum benefit |
What to check in an offer
- Which implementation route applies: direct promise, support fund (Unterstützungskasse), direct insurance (Direktversicherung), pension fund (Pensionskasse) or pension scheme (Pensionsfonds). This determines costs and billing.
- Whether payouts are planned as a pension or as a lump sum, because this determines the contribution burden in old age.
- Whether your employer pays the 15 percent top-up if the conversion saves social security contributions.
- Whether the contract can be transferred or made paid-up when you change jobs.
Why does health insurance matter in old age at all?
Statutory health insurance is financed by the contributions of its members, and in old age income with a pension character is also taken into account. A company pension is such income. The rule is therefore not a special burden for company pensioners, but follows the principle that income in old age is recorded for contribution purposes.
How strongly this affects you depends on your other income in old age. A small company pension can remain largely free of contributions because of the allowance, while a larger pension or a lump sum has a noticeable effect.
Common mistakes in the calculation
- Looking only at the net amount in the year of conversion. This hides the later contribution burden in old age.
- Overlooking the employer top-up. Without it, the overall calculation is clearly worse.
- Leaving the form of payout open. A pension and a lump sum are treated differently for contribution purposes.
- Ignoring the allowance. Especially for smaller benefits, it can noticeably reduce the contribution burden.
- Signing the contract without checking the costs. Costs of the implementation route reduce the later benefit and should be part of the calculation.
Frequently asked questions
Do I always pay health insurance contributions on my company pension?
If you have statutory health insurance and the pension is paid as a pension benefit, contributions apply to the extent that the allowance is exceeded. If you have private health insurance, you are generally not affected. The exact amount depends on the type and amount of the benefit.
Is salary sacrifice still worthwhile despite later contributions?
That depends on the duration, the amount and the form of payout. Being converted free of contributions today is a noticeable advantage for many people. Whether this is balanced out in old age can only be answered with your own figures. It is therefore worth running two scenarios before you decide.
Why is there a rule about 120 months?
The contributions on a lump sum do not fall due all at once. The legislator converts the benefit into up to 120 months: one hundred and twentieth counts as the contribution-liable monthly amount (§ 229 para. 1 sentence 3 SGB V). This also applies where the lump sum was already agreed before the pension event.
Does this also apply to long-term care insurance?
As a rule, yes. For pension benefits, a contribution to the statutory long-term care insurance also applies if you are subject to compulsory membership. The logic largely matches health insurance. Your health insurance fund can tell you the exact amounts for your case on request.
Can I influence the contributions through the form of payout?
To some extent. If you choose a lump sum instead of a pension, the contribution burden is spread over ten years. For larger amounts this can make a noticeable difference. Whether a lump sum is cheaper overall depends on tax, contributions and your life expectancy. A calculation with your own figures is especially important here.
What changes if I have private health insurance?
Salary sacrifice then works mainly through tax and social security contributions, not through the premiums for private health insurance, which do not depend on your income. For the benefits in old age, your insurer should explain the effect on your premiums in writing.
What to do now
- Ask your employer to state in writing the type of commitment and the implementation route.
- Ask whether the payout is planned as a pension or as a lump sum.
- Calculate examples with your salary and your health insurance, both for the saving phase and for the payout.
- Check whether the employer top-up is paid.
- For larger decisions, get a personal assessment before you sign.
Related guides
- Retirement Provision at 25: Building Blocks, Riester and bAV
- Retirement Provision for Students: Starting Early With Small Amounts
- Switching to Private Health Insurance at Career Start
- Statutory Health Insurance in Your Studies: Experience, Costs, Limits (in German)
Sources: § 1a BetrAVG (as of October 2026), § 3 Nr. 63 EStG (as of October 2026), § 1 Abs. 1 Nr. 9 SvEV (as of October 2026), § 226 SGB V (as of October 2026), § 229 SGB V (as of October 2026), Deutsche Rentenversicherung: Rechengrößen 2026 und 2027 (as of October 2026).
Stand: October 2026. This guide is general information, not individual advice.
