BRSG II: What multinationals need to know

December 2025

The German government has presented a draft of the Second Act to Strengthen Occupational Pensions (BRSG II). While readings in the Bundestag were scheduled for October/November 2025, the law is expected to come into force in early 2026.[i] Employers should note that the legislative process is ongoing, and details may still change. This reform aims to make occupational pensions more attractive and accessible, with significant implications for multinational employers operating in Germany.

[i] Disclaimer: The BRSG II is still in draft form. Timelines and provisions may change during the legislative process.

The reform introduces significant improvements for employees with lower incomes. The income threshold for subsidies will rise to €2,898 gross per month, allowing more workers to benefit from employer support. At the same time, the maximum subsidized employer contribution will increase to €1,200 annually, or €100 per month. The government subsidy remains at 30%, which employers can offset against additional income tax - up to €30 per month per employee.

These changes create tax-advantaged opportunities for companies to help employees in lower income brackets build stronger retirement savings.

Another key innovation is the ability for employers to introduce automatic salary conversion without a collective bargaining agreement, provided this is regulated through a company agreement. Under these arrangements, employers must contribute at least 20% of the converted salary, and this contribution will be immediately non-forfeitable by law.

This approach enables organizations to establish comprehensive, company-wide retirement provisions, helping to close future pension gaps and offering attractive employer contributions that encourage participation.

Employees who choose to receive a partial statutory pension will soon have the option to draw on their company pension earlier. Previously, this was only possible when claiming a full statutory pension.

Employers should review existing agreements to ensure compliance with this new flexibility, which is designed to motivate older employees to remain in the workforce longer while maintaining sufficient income.

Finally, employees returning from unpaid leave - such as parental leave, sabbaticals, or extended illness - will have a legal right to resume their company pension plan under previous conditions. They will have three months to decide whether to reinstate their salary sacrifice agreement.

This measure provides greater planning security for both employers and employees, ensuring continuity in retirement savings even after extended absences.

The measures introduced by BRSG II offer a wide range of opportunities to enhance the efficiency, appeal, and reach of occupational pension schemes. Employers planning to adopt one or more of these provisions should take time to carefully assess their options and determine the best fit for their organization.

• Compliance & harmonization: Review your German subsidiary’s pension arrangements to ensure alignment with BRSG II and consider opportunities to harmonize benefits across jurisdictions.
• Cost & risk management: The shift toward pure defined contribution models can reduce long-term liabilities but requires clear communication to employees about investment risks.
• Employee engagement: Enhanced subsidies for low-income earners present an opportunity to boost participation and demonstrate commitment to financial well-being.