Germany: Adjusting Occupational Pension Plans To Upcoming German Pensions Act Amendments

Practical Implementation And Recommended Actions
Last Updated: 16 June 2016
Article by Nicolas Rößler, LLM
Most Read Contributor in Germany, September 2016

Pension law in Germany will be significantly amended by the transposition of the European Mobility-Directive (Directive 2014/50/EU) into German law, as announced on December 30, 2015. The new rules will come into effect in 2018. Employers that operate pension plans in Germany should use the time remaining to thoroughly analyze the impact of the new rules on their pension plans and to make any necessary adjustments.


New Rules on Vesting, Sec. 1b, para. 1, BetrAVG (new)

The vesting period for acquired pension entitlements will be reduced from five years to three years. The minimum age for the accrual of vested pension entitlements will be reduced from 25 years to 21 years.

Prohibition of Discrimination Against Former Employees, Sec. 2a, para. 2, BetrAVG (new)

In contrast to the current rules, which provide for static vested entitlements, under the new rules, any plan amendments or changes to the benefit calculation will also have to be applied for former employees with vested entitlements or pensioners if non-application would disadvantage these individuals relative to comparable active employees. The new law offers a range of possibilities as to how such disadvantages can be avoided by adding specific adjustment mechanisms to the plan rules.

Stricter Requirements on Compensation for Mini Pension Entitlements, Sec. 3, BetrAVG (new)

If a former employee begins a new employment relationship in another EU member state, pension entitlements vis-à-vis his former German employer can only be paid out as a lump sum with the employee's consent and if the employee informs his former employer about his new employment no later than three months after termination of the employment relationship. This applies only to mini pension entitlements. All other lump sum payouts remain prohibited.

Broader Information Rights of Current and Former Employees, Sec. 4a, BetrAVG (new)

At an employee's request, employers and pension providers must inform the employee if and how the employee may acquire pension entitlements, about the current value of the pension entitlements and the expected benefits upon reaching retirement age, about the effects of a termination of the employment relationship on the pension entitlements and how the employee's entitlements will increase after such termination. The information must be comprehensible in text form and must be provided within a reasonable period of time.

Employees with vested entitlements and pensioners must be informed about the amount and the expected future increase of their pension entitlements.

FOR FURTHER DETAILS on the upcoming amendments to the German Pensions Act, please see our Legal Update:

May 20, 2014, Legal Update "Significant Changes of the Law on Occupational Pensions in Germany – Mobility- Directive enters into force on May 20, 2014"


Given the complexity of the subject matter, it is obvious that there is no one-size-fits-all solution to address the changes in the law concerning pension plans. All employers are advised to investigate and identify potential pitfalls in their pension plans.

First Step: Analyze the Status Quo

As a first step, employers should diligently review and analyze existing plan rules. Building on the results of this exercise, we recommend the following high-level implementation steps:

Actions Regarding the New Vesting Rules

  • Provisions in pension plans that cite the current or former rules on vesting will become invalid in 2018. To avoid the potential for misunderstandings and disputes, it is recommended to adjust the text of these provisions accordingly.

Action to Avoid Discrimination Against Former Employees

  • Pension plans that were still open to new entrants on May 20, 2014, and either provide for a static continuity of former employees' vested pension entitlements or are silent on this point need to be supplemented with provisions to avoid discriminating against former employees.
  • The new law offers a set of structuring possibilities. To determine the best fit solution legal certainty as well as economic effects need to be considered in each case.

Action Regarding the New Information Rights

  • Any template information letters should be revised.
  • The new requirement that information needs to be provided in "a comprehensible way" raises the standard for the unambiguous quality of the content and requires that the text be comprehensible for a well-informed layperson.

The necessary actions described will often require the involvement of employees or their representative bodies. This can be a good opportunity to update any other rules that are no longer in compliance with the law or contemporary standards.

In addition to these legal aspects, administrative systems as well as the respective communication tools for employees may have to be adjusted. For these reasons, we recommend taking the aforementioned actions promptly.

Originally published 16 June 2016

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.