For SMEs: The right retirement provisions at the right time

For SMEs: The right retirement provisions at the right time

How old is your company? Are you a promising start-up or can you already look back on a proud tradition? Find out which pension solution best suits your personal situation.
Occupational retirement provision is becoming an increasingly important strategic issue. And especially in view of increasing life expectancies, it must be sustainable – in every phase of the company's development. This is because companies have very different demands on their pension fund, depending on where they are in their life cycle.

Pension plan for new entrepreneurs

Are you thinking about realizing your dream and becoming self-employed? A newly established company requires your full attention. The subject of insurance is often neglected. Especially the pension fund is not at the top of the list of priorities. And why should it be? If you found a sole proprietor company, you are not even subject to compulsory insurance. It is also entirely up to you whether or not to make private provisions via the third pillar (3a or 3b) – voluntarily. However, a suitable pension plan is sensible in order to ensure that there are no excessively large gaps in the second pillar and you can return as seamlessly as possible to the occupational pension plan for employees. After all, who knows whether you will return to regular employment in five or ten years' time?

The situation is different if you are a new entrepreneur with one or two employees. For you as an entrepreneur, the second pillar is not mandatory in a sole proprietor company. However, you are required by law to conclude a second pillar pension plan for your employees.

Would you like to be to be well covered, but currently still only have little money put aside? Choose increased risk benefits and opt for a low-cost solution when saving in the initial phase. As soon as the company has established itself, the pension fund can be expanded with increases in retirement benefits and purchases into the second pillar.

Mandatory BVG for limited liability companies (GmbH) and public limited companies (AG)

Would you like to convert your sole proprietor company into a GmbH or AG after two or three years or would you like to start your own business with a corporation? In this case, you are regarded as an employee of your own company and must take out the second pillar insurance. Here, too, you have room to maneuver and can adapt the savings contributions to your company's budget. From a tax point of view, it can be worthwhile for the company to take over more than half of the pension fund contributions, for example 60/40. If the company wants to take over a higher share, you should talk to your fiduciary or tax advisor.

The pension fund grows with you

Your company is booming, and you are swamped with orders? Congratulations! From now on, you should regularly check whether the benefits of the pension fund solution still meet your increased income and the increased demands. Incidentally, an occupational pension plan with generous benefits is also an important way to ensure employee loyalty and to attract qualified employees. It is best to review your solution every two to three years with your pension specialist and a fiduciary.

Harvest time – also in the pension fund

The company has established itself in the market and has reached a certain size. Now is the time to ask yourself how much scope your pension fund offers you: Could a BVG solution with extended pension benefits be worthwhile for your management team and you? Here, for example, you could tie in higher savings contributions for retirement capital or improved risk benefits.

Is flexible retirement becoming an issue? Regardless of whether you are the boss or an employee, you should start to think about retirement 10 to 15 years in advance. This way you can set the right course, for example by making tax-efficient purchases into the second pillar.

Handing over the reins of the company

It is likely to be on your mind for a long time: one day you will end your entrepreneurial life's work or hand over the reins to someone else. This step must be planned well in advance and choosing the right time is very important. In this context, you should also give some thought to which of your dreams you would like to realize for yourself. Because by handing the reins to someone else, you also lay the foundation for your own retirement. Clarify whether you want to receive your retirement benefits as a lump sum, as a pension or as a combination of both. Individual financial and pension planning might be of interest to you now.

If you decide to sell your company and this results in a change of pension fund, don't forget to take occupational retirement provision into account during the negotiations: Does the new pension fund offer your employees the same benefits as before? When it comes to retirement provisions, you should clarify these issues and seek advice in case of doubt to ensure a sustainably good solution for everyone involved.

Further articles

Ahead of the game with smart pension provision

There is a wide range of services on offer in the second pillar. If small and medium-sized enterprises (SMEs) make the right choice, they can get themselves into a good position on the labor market.

Attracting the best talent as an SME

Practical tips on how you can retain your existing staff and convince new employees of your strengths.

Retirement planning becomes a key issue when you turn 50

Those who wish to enjoy a well-funded retirement should start to take stock of the situation once they turn 50 and carry out a thorough review of their retirement planning.
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