It’ll soon be that time of the year again: your Betriebliche Vorsorgekasse (corporate provision company) will be sending your annual account statement from your »Abfertigung neu« severance scheme. Maybe you even get several of these?
Each month, your employer pays 1.53 % of your gross salary into a Corporate Provision Company (BVK; Betriebliche Vorsorgekasse) and in this way makes a regular severance contribution for you. The annual statements of account contain the severance entitlement acquired to date, employer contributions, the management fees, the investment performance and the basis information about the pursued investment policy. We frequently receive the following questions:
Who chooses the corporate provision company (BVK)?
How the BVK is chosen varies by company: In companies with a works council (Betriebsrat) it is determined by means of an operational agreement (Betriebsvereinbarung) between the employee and the works council. In companies that do not have a works council, the employer decides, but is required to inform employees in writing, and employees have an objection right. Where there is no agreement reached, then the mediation panel (Schlichtungsstelle) may be involved.
Can I combine several severance accounts?
Yes, combining accounts gives you a better overview, and reduce unnecessary paperwork.
You may bundle your severance contributions at your current employer’s BVK, if severance contributions held in other provision companies have not been contributed to for at least three years. To do you, you need to submit an application form and a copy of your official photo identification document to your current BVK.
If you choose to remain at several different BVKs, you will not lose any money. You will still retain your claim to your severance fund.
When may my severance fund be paid out?
If three years’ contribution have been paid in for you, and you do not terminate your contract yourself, are not dismissed through your own fault, or have not left without authorisation, you may request a pay-out. Contribution periods at different employers are added together.
Is there a deadline for a pay-out to be made?
Yes, if you assert your right to a pay-out, the BVK has a further 2 months time, and is then required to pay out with in 5 bank working days. This 2-month period begins at the earliest on the date on which your employment relationship ends.
Do I have to have my severance fund paid out?
No, you may also leave your money in the BVK, where it will continue to be invested. You can also transfer your severance fund to your new employer’s BVK.
Alternatively, you can also pay the balance into a private supplementary pension insurance policy or a pension fund.
Our tip
Part-time employment reduces the amount of your severance pay – the more hours you work per week, the more money is paid in for you.
To ensure greater financial security in old age, leave your severance fund untouched for as long as possible.
It can be particularly worthwhile not to decide on an early pay-out, if you have a pension gap!
Other editions:
28 Health Insurance
24 Low risk investing
26 Poverty in old age
A to Z of Finance:
You can find further details on the A to Z of Finance section of our website.
“Abfertigung neu” severance scheme
Applies for employment relationships that commended since 01.01.2003.
Severance fund entitlement
Describes an employee’s claim for a pay-out of their accrued severance fund at a later date.
Rucksack principle
Severance contributions remain in a BVK account until you satisfy the conditions for receiving a pay-out. Then you receive the entail severance fund amount – also from previous jobs.
Application to merge accounts (Antrag auf Zusammenführung)
The Arbeiterkammer has a pro forma letter available for doing so.