In the second part of this review of the most important case law issued by the German Federal Labor Court in the area of occupational pensions over the past year (2025), we examine two key decisions concerning salary conversion and the mandatory employer subsidy, as well as the interpretation of the scope of pension plan rules and their practical implications for employers.
Like employment law in general, the often less-prominent field of occupational pensions — which employees regularly cite as one of the most valued benefits — is subject to continuous change and must adapt to evolving factual circumstances, requirements and developments. In many cases, this evolution is shaped by the case law of the Third Senate of the Federal Labor Court (Bundesarbeitsgericht, BAG), which has special jurisdiction in all matters relating to occupational pensions and clarifies both specific and more general questions of application by interpreting and applying pension plan rules and the underlying statutory provisions.
After the first part of this series focused on two decisions concerning the adjustment of pension benefits, this second part addresses two BAG decisions from August 2025: one on deferred compensation (Entgeltumwandlung) and the employer subsidy, and one on the interpretation of the scope of pension plan rules.
Federal Labour Court judgment of August 26, 2025 – 3 AZR 31/25
This decision by the BAG must be read in the context of earlier case law of the Third Senate concerning...
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