top of page

Can You Cash Out Your German Company Pension (bAV) After Leaving Germany?

Writer: Johannes Kühn
Johannes Kühn
Aug 19
14 min read

Updated: Aug 20

If you worked in Germany, you may have built up two completely separate pensions: your statutory pension with Deutsche Rentenversicherung (DRV) — and a company pension, known as betriebliche Altersversorgung or bAV. Getting your DRV contributions refunded does not touch the company pension, and the company pension does not pay out just because you left the country.

But German law contains a provision most people — including many HR departments — have never heard of. Once your statutory pension contributions have been refunded, § 3 Abs. 3 of the German company pension act (BetrAVG) gives you the right to demand a lump-sum settlement of your vested company pension. This guide explains how that works, who can use it, how much you can expect, and what happens with tax when you live abroad.

The short answer

  • Your state pension refund and your company pension are two separate claims. One does not include the other.

  • A vested bAV is normally locked until retirement age. You cannot simply cash it in — the law forbids it.

  • Unlock 1: Once your DRV contributions have been refunded, § 3 Abs. 3 BetrAVG entitles you to demand a cash settlement (Abfindung) of your vested company pension — whatever its size.

  • Unlock 2: Small entitlements (2026: up to €59.33 monthly pension or €7,119 lump-sum value) can be cashed out by the employer even without a DRV refund.

  • Public-sector supplementary pensions (VBL, ZVK and similar) follow their own rules — see below.


In this guide:

Germany's two separate pension pots

For most employees, participation in the statutory pension is automatic: 18.6% of gross salary — the current rate — goes to Deutsche Rentenversicherung, half paid by you and half by your employer. If you qualify for a contribution refund under § 210 SGB VI — typically as a non-EU citizen now living outside the EU and the UK, 24 months after your last compulsory contribution — you get back the employee share you paid yourself — currently 9.3% of gross; earlier years' rates differed slightly. Our complete pension refund guide covers the details.

The company pension is different. It exists only if your employer set one up or you converted part of your salary into one (Entgeltumwandlung), and the money sits in a separate arrangement — usually a contract with an insurer or a pension fund, not with the DRV. When the DRV refund is paid out, your statutory insurance account is dissolved by law (§ 210 Abs. 6 SGB VI). Your company pension is completely unaffected by that: it is a separate legal claim with its own rules, and it will not move unless you act on it.

Did you have a company pension? How to check

Many former Germany employees genuinely don't know. Look for:

  • Payslip lines such as "Entgeltumwandlung", "Direktversicherung", "bAV", "Pensionskasse" or "betriebliche Altersvorsorge" — usually a deduction before tax.

  • Annual statements (Standmitteilungen) from providers like Allianz, AXA, Swiss Life, ERGO, R+V, Nürnberger or HDI, or from industry schemes such as BVV (banking and finance).

  • Public-sector abbreviations — VBL, ZVK, VddB or VddKO on your payslip mean you were in a public-sector or theatre/orchestra supplementary scheme (different rules; see below).

  • Your employment contract or a company Versorgungsordnung mentioning occupational pension benefits.

If you're unsure, ask your former employer's HR department which scheme you were enrolled in and who the provider is — or ask us to check as part of your refund case.

The five bAV vehicles — and why the type matters

German occupational pensions run through five legal vehicles. Three are external, insurance-type arrangements: the Direktversicherung (by far the most common for internationals), the Pensionskasse and the Pensionsfonds. Two are internal promises financed by the employer: the Direktzusage and the Unterstützungskasse. The type determines who pays a settlement and how it is calculated — for insurance-type contracts you receive the capital accumulated in the contract, for internal promises an actuarial present value.

Why you can't simply cash out German company pension (bAV) entitlements

Many former employees try to cash out German company pension (bAV) entitlements directly with the insurer — and are refused, because once you have left your employer with a vested entitlement, two statutory locks apply.

First, the settlement ban: § 3 Abs. 1 BetrAVG says vested entitlements of departed employees may only be cashed out in the specific cases the law defines. Second, the disposal ban: under § 2 Abs. 2 BetrAVG you may not assign, pledge or surrender the insurance contract for cash — if you cancel it, the policy simply becomes paid-up (beitragsfrei) and waits for your retirement. German courts have confirmed that this lock survives even if you continued the policy privately after leaving your job (OLG Hamm, 20 U 72/06).

This is why writing to the insurer "I have left Germany, please pay out my policy" gets a polite refusal. The insurer is not being difficult — it is following the law. You need one of the statutory keys.

First question: is your entitlement vested?

Whether you still own the entitlement at all depends on vesting (Unverfallbarkeit):

  • Salary-conversion bAV (Entgeltumwandlung): vested immediately, by law. If you paid in from your own salary, the entitlement is yours from day one.

  • Employer-funded bAV: for departures since 2018, vested if the pension promise existed for at least 3 years and you were at least 21 when you left. Older departures faced longer periods (five years and a minimum age of 30, later 25; before 2001 up to ten years) — the rules at your departure date apply (transitional rules: § 30f BetrAVG).

  • Not vested? Then the employer-funded entitlement lapsed when you left, and there is nothing to claim. One exception worth checking: some employers hand over the insurance policy anyway — then it is your private contract and normal contract rules apply, including surrender.

The key for expats: § 3 Abs. 3 BetrAVG — your DRV refund unlocks the bAV

The provision reads:

"Die Anwartschaft ist auf Verlangen des Arbeitnehmers abzufinden, wenn die Beiträge zur gesetzlichen Rentenversicherung erstattet worden sind." — § 3 Abs. 3 BetrAVG ("The entitlement must be settled at the employee's request if the statutory pension contributions have been refunded.")

Five things make this powerful:

  1. It is a right, not a favour. If you demand the settlement, your former employer must arrange it — "the contract runs until 67" is not a valid refusal. How the payout is implemented with the provider depends on the arrangement.

  2. It applies across the five classic bAV vehicles — Direktversicherung, Pensionskasse, Pensionsfonds, Direktzusage and Unterstützungskasse. Only pure defined-contribution schemes under the 2018 "social partner model" (§§ 21 ff. BetrAVG) and the public-sector schemes below follow their own rulebook.

  3. There is no size limit. Unlike the small-entitlement route, § 3 Abs. 3 works for large entitlements too.

  4. It requires a completed refund. The law says contributions "have been refunded" — a pending application is not enough. Your DRV refund decision (Erstattungsbescheid) is the proof you attach.

  5. It covers entitlements, not running pensions. If your company pension is already being paid out monthly, this route is closed.

The logic behind the rule: once the DRV refund has dissolved your statutory pension account, German law accepts that your German retirement provision has ended — so the occupational top-up may be wound up as well.

In practice, you send a written settlement demand to your former employer (with a copy to the provider), citing § 3 Abs. 3 BetrAVG and attaching the refund decision. For a Direktversicherung, the insurer then pays out the contract value and the pension promise is extinguished. Be prepared to explain the provision — many HR departments and even some provider hotlines have never processed one.

Sources: § 3 BetrAVG

Who can actually use this route?

Anyone who can obtain the DRV contribution refund. In broad strokes that means: you are not a citizen of Germany, the EU/EEA, Switzerland or the UK; you currently live outside the EU and the UK; at least 24 calendar months have passed since your last compulsory contribution; and if your country has a social security agreement with Germany (USA, India, Australia, Canada, Brazil, the Philippines and others), you generally qualify only with fewer than 60 months of German contributions. A few countries carry special rules on top — residence in Israel or the former Yugoslav region can block a claim, for example, while Turkish citizens face no 60-month limit at all. The full eligibility rules — including the special cases — are in our pension refund guide.

If you cannot get a DRV refund — for example as an EU citizen — the § 3 Abs. 3 route is closed. Your remaining options are the small-entitlement route below, or simply leaving the bAV to be paid at the contractual retirement age (usually 62 or later), which works from abroad too.

The small-entitlement route: 2026 figures

Separately from the refund rule, an employer may cash out a mini-entitlement without your consent (§ 3 Abs. 2 BetrAVG). Since 22 January 2026 — the Second Company Pension Strengthening Act (BRSG II) — the thresholds are:

  • Monthly pension entitlement up to €59.33 (1.5% of the 2026 reference figure of €3,955), or

  • Lump-sum benefit value up to €7,119 (18/10 of the reference figure).

Note the direction: this is the employer's choice, not your right. But employers are often glad to settle small entitlements — each one costs ongoing administration — so if your bAV is small, it is always worth asking, even without a DRV refund. One protection to know: if you started a new job in another EU member state and told your former employer within three months of leaving, a settlement needs your consent.

Also new since 2026: with your consent, entitlements up to €79.10 monthly / €9,492 capital value can be settled if the money is paid into the statutory pension scheme — rarely useful if you are leaving the German system, but part of the current law.

Some bAV contracts from a two-to-four-year stint in Germany fall under these thresholds — which means even people who cannot get a DRV refund may be able to cash out.

How much will you actually receive?

The settlement amount follows § 3 Abs. 5 in connection with § 4 Abs. 5 BetrAVG:

  • Direktversicherung / Pensionskasse / Pensionsfonds: the capital accumulated in the contract (gebildetes Kapital) — in practice, essentially the current value of the policy. For young contracts this can be less than the contributions paid, because acquisition and administration costs are charged in the early years.

  • Direktzusage / Unterstützungskasse: the actuarial present value (Barwert) of your future benefits.

  • Before you demand a settlement, ask the provider for the current value, or check your latest annual statement, so you know what to expect.

Sources: § 3 BetrAVG · § 4 BetrAVG

Tax: what happens when you live abroad

The honest summary: the payout is rarely tax-free — and what Germany may tax depends on the vehicle, on how the contributions were treated, on the contract date, on the type of settlement and on your treaty.

  • Payouts from contracts funded with tax-free contributions (§ 3 Nr. 63 EStG — the standard model since 2002) are fully taxable under German domestic law as "other income" (§ 22 Nr. 5 EStG). That applies to non-residents too (§ 49 Abs. 1 Nr. 10 EStG); the Finanzamt Neubrandenburg is centrally responsible for pension income of people living abroad.

  • Settlements from a Direktzusage or Unterstützungskasse are taxed differently — as deferred employment income — with their own rules for non-residents.

  • Domestic law is not the end of the story. The double taxation agreement between Germany and your country of residence determines who finally keeps the tax: where it gives your residence country the exclusive taxing right, German tax that was deducted or assessed can generally be reclaimed; under other treaties Germany retains a taxing right, or the German tax is credited against tax due abroad. This varies treaty by treaty and by payout type — worth checking both before and after the payout.

  • Old contracts from before 2005 that were flat-taxed under § 40b EStG can often pay out a lump sum tax-free.

  • Reduced taxation for lump sums (the so-called Fünftelregelung) is generally not granted where the contract itself offered a capital option (Federal Fiscal Court); whether a statutory settlement under § 3 Abs. 3 is treated more favourably has not been finally decided.

  • Good news: German health and long-term-care contributions on company pension payouts only affect members of German statutory health insurance. If you live abroad and are no longer a member, nothing is deducted for that.

This section is general information, not tax advice — get advice for your specific country and contract.

Public-sector schemes: VBL, ZVK, VddB, VddKO

If your payslip says VBL, ZVK, VddB or VddKO, you were in a public-sector (or stage/orchestra) supplementary scheme. These follow their own statutes, and the BetrAVG applies to them only in modified form (§ 18 BetrAVG) — the § 3 Abs. 3 settlement right does not carry over one-to-one, and the patterns differ scheme by scheme. In VBLklassik West, for example, an employee-contribution refund may be available if you left without fulfilling — or being deemed to have fulfilled — the applicable waiting and vesting requirements; only your own contributions are refunded, without interest, and the application must generally be made before age 69. In VBLklassik Ost that refund is generally not available, because the waiting period can still be completed by the mere passage of time after leaving. VddB and VddKO have their own contribution-period and departure rules again. In short: these schemes need a scheme-specific check — our VBL Pension Refund Guide covers the largest one in detail.

Step by step: from refund to bAV payout

  1. Collect your documents — payslips, annual statements, employment contract.

  2. Identify the scheme — which vehicle, which provider, and is the entitlement vested?

  3. Complete your DRV refund first. Check your eligibility and amount with our refund calculator; the 24-month waiting period and the application are explained in the refund guide.

  4. Get the current value of your bAV contract from the provider.

  5. Send the settlement demand to your former employer, citing § 3 Abs. 3 BetrAVG, with the Erstattungsbescheid attached.

  6. Receive the payout and keep the provider's tax documentation.

  7. Check the tax side in your country of residence (and the treaty with Germany).

FAQ

Does the DRV refund include my company pension?

No. The refund covers only your statutory contributions. The company pension is a separate arrangement and entitlement that must be claimed separately — but the completed refund is exactly what unlocks it.

My bAV is small. Do I need the DRV refund to cash it out?

Not necessarily. In 2026, entitlements up to €59.33 monthly pension or €7,119 capital value can be settled by the employer without any refund. It is the employer's choice, but usually in their interest too — ask.

My provider says my vested company pension cannot be cashed out. Are they right?

That is the standard answer — and as a general rule it is even correct: a vested company pension is normally protected until retirement and cannot simply be surrendered for cash. Settlements after a German statutory pension refund are rare in day-to-day practice, so providers and former employers often reply with the general rule first, without checking the specific exception in § 3 Abs. 3 BetrAVG. This first-line rejection is so routine that we see it even when the request comes from a law firm.

Once your DRV contributions have actually been refunded, the general statement no longer resolves your case: you can demand settlement of an eligible vested entitlement. Send the request formally to your former employer — with the provider in copy, not just to a service hotline — citing § 3 Abs. 3 BetrAVG and attaching the DRV refund decision as evidence.

Employer funding does not by itself prevent a settlement; what matters is whether the entitlement was vested when you left. If it vested, the § 3 Abs. 3 route can apply. If it never vested, there may be no surviving entitlement to settle. Public-sector and other special schemes follow different rules.

I was never vested — can I claim anything?

An employer-funded entitlement that never vested lapsed when you left. If you paid in yourself via salary conversion, you are vested by law regardless of how short your employment was.

My old employer no longer exists. Is the money gone?

Usually not. For insurance-type schemes the capital sits with the provider, not the employer, and internal promises are covered by Germany's insolvency protection scheme (PSV). These cases need individual handling — get in touch.

Is there a deadline for the § 3 Abs. 3 demand?

The provision itself sets no explicit deadline. But don't sit on it: providers merge, addresses change, records get archived, and general limitation rules can come into play. The sooner after your refund, the smoother.

I'm an EU citizen — can I use this?

Generally no — EU/EEA/Swiss and UK citizens normally cannot obtain the DRV contribution refund in the first place, wherever they live. The small-entitlement route may still apply, and your bAV remains payable at retirement age wherever you live then.

How long does the payout take?

Realistically a few weeks to a few months, depending on how quickly the former employer and the provider respond — and on whether they already know the provision. A precise written demand with the refund decision attached speeds things up considerably. (That timing is Germany Pension Refund casework experience, not a statutory period.)

Main FAQ sources: § 3 BetrAVG · § 1b BetrAVG · § 210 SGB VI

Had a company pension? Tell us when you start your refund

We handle company pension cash-outs for our pension refund clients — from identifying the scheme and the provider to the settlement demand and payout. The earlier we know about your bAV, the better we can sequence both claims. Start your refund or check your refund amount first — and mention your company pension in the notes.

How we researched this guide

Last legal review: 20 August 2026.

This guide was written by Johannes Kühn, founder of Germany Pension Refund, who has worked international German pension contribution-refund cases since establishing the service in 2015. Company-pension settlements are handled alongside those refund cases; the practical observations come from that casework, the legal rules from the sources identified below — and the two are kept apart on purpose.

We separate rules from experience. When this guide describes a provider response, a document requirement or a processing pattern we have repeatedly observed, it is labelled as Germany Pension Refund experience — never presented as law. When it states a rule, that rule traces to a source you can check.

Our source order

  1. German law. The Betriebsrentengesetz (BetrAVG) — above all §§ 1b, 2, 3 and 4 — together with § 210 SGB VI and the relevant tax provisions come first.

  2. Promulgated amendments. Changes are checked in their promulgated Bundesgesetzblatt text — for this guide, above all the Second Company Pension Strengthening Act (BRSG II, BGBl. 2026 I Nr. 14), which sets the current settlement thresholds.

  3. Court decisions. Where the statute leaves room, the courts' current line controls — the OLG Hamm on the surrender ban after private continuation, the Federal Fiscal Court on the taxation of lump sums.

  4. Scheme statutes, official guidance and forms. VBL's published rules, the DRV's refund materials and the Finanzamt Neubrandenburg pages for pension income paid abroad control the practical route.

  5. Germany Pension Refund experience. Our settlement casework — first-line provider rejections, document requirements, response times — explains what statutes and scheme rules don't show.

  6. Germany Pension Refund is a service of Berlin-based ATLAES GmbH. Our partner German law firm reviews and submits managed claims and handles legal work within the agreed scope. The brand name is used throughout because it's the name readers know; the GmbH is identified here for transparency.

Key primary sources

How we keep it current

  • Every January: the Bezugsgröße-derived settlement thresholds (§ 3 Abs. 2 and 2a BetrAVG), the contribution rate and every euro figure in this guide.

  • Every year: the statute texts, court decisions, scheme rules and the examples.

  • After any known change: a BetrAVG amendment, a relevant ruling or a changed provider or scheme practice is reflected immediately.

  • After every material edit: the visible review date changes and the change is recorded.

This guide gives general information, not an individual decision. Ask for an individual assessment if your case involves a public-sector, church or social-partner-model scheme, a pension already in payment, an insolvent or dissolved former employer, a departure before 2005 or an old § 40b contract, several entitlements with different providers, or unclear vesting.

Next step: if your DRV refund is still ahead of you, start with the eligibility checker and refund calculator — the completed refund is the key that unlocks the settlement. If your refund decision is already in hand, ask Germany Pension Refund to review your company pension — with the Erstattungsbescheid, your provider's name and your last annual statement, the check is quick.

 
 
bottom of page