If you’re considering leaving Germany, you may wonder what happens to your company pension (betriebliche Altersversorgung or bAV). The good news is that your bAV contract remains active, even if you’re no longer making contributions. Here’s what to expect:
Paused Contributions but Continued Growth
When you leave Germany, your contributions to the bAV will typically stop, as these tax-advantaged savings are designed for employees actively working in Germany. However, your existing capital remains in the contract and continues to grow over time through the investment returns of the underlying funds. This means that although new contributions aren’t added, your accumulated savings still have the potential to grow based on the investment performance within your bAV.Loss of Tax and Social Security Benefits
The tax and social security savings associated with a bAV are tied to being employed in Germany. Once you’re no longer working in Germany, these benefits end, as they’re specific to the German tax system. However, if you remain employed by a German company while working from abroad, you may still be eligible for these savings, depending on your employment terms and specific tax agreements.Long-Term Preservation of Savings
Since early withdrawals or transferring your bAV savings into a private pension are typically not possible, your accumulated bAV capital will remain in place until you reach the eligible retirement age. This setup ensures that your company pension savings are preserved and continue to grow over the years, regardless of your location.Am I Able to Receive Pension Payouts in a Different Country?
Yes, once you reach the eligible retirement age, you can receive bAV pension payouts even if you’re living outside Germany. Under the withholding tax (Abgeltungssteuer) rule, these payouts will be taxed according to German tax laws. However, Germany has Doppelbesteuerungsabkommen (Double Taxation Agreements, DTA) with many countries, which are designed to prevent you from being taxed twice on the same income. The DTA ensures that the tax is either partially or fully credited in your country of residence, depending on the specific agreement between Germany and that country.
This system simplifies tax management and can prevent double taxation, but it's advisable to consult a tax expert to understand any specific implications for your retirement income based on the DTA with your country of residence.