Is a betriebliche Altersvorsorge (bAV) via Entgeltumwandlung always better than an ETF savings plan?

No. A bAV brings tax deferral and often an employer contribution, but usually a lower assumed return and full deferred taxation on payout, including health and nursing care contributions on the pension. An ETF savings plan has the full equity return but no employer contribution and no tax deferral. Which path brings more over decades depends on the specific bAV contract, the employer contribution, and your own tax situation in retirement: there is no blanket answer.

How large is the statutory employer contribution with Entgeltumwandlung?

Since 2019 the employer must contribute at least 15 percent of the converted amount, to the extent it saves social contributions through the salary conversion (§1a(1a) BetrAVG). Many employers voluntarily pay more. Anyone taking out a bAV via Entgeltumwandlung should actively check whether the statutory minimum contribution is actually being paid.

Up to what limit is Entgeltumwandlung free of tax and social contributions?

Under §3 no. 63 EStG, Entgeltumwandlung remains free of income tax up to 8 percent of the pension insurance Beitragsbemessungsgrenze per year, for 2026 that is 8.112 euros. Under §1(1)(9) SvEV, only the portion up to 4 percent of this ceiling, for 2026 up to 4.056 euros, is free of social contributions. Contributions between these two limits are free of income tax but still liable for social contributions.

Why is a lower return assumed for the bAV than for the ETF savings plan?

Because many bAV contracts run through insurance companies or Pensionskassen that include guaranteed elements, administration costs, and a lower equity allocation than a freely chosen ETF savings plan. This is a model assumption for a typical contract, not a general statement about all bAV products: pure fund solutions without guarantees can be closer to the ETF return; contracts with a high guaranteed element can be significantly lower.

Does a lower social-contribution liability through Entgeltumwandlung negatively affect the later statutory pension?

Yes. The social-contribution-exempt portion of Entgeltumwandlung does not count toward pension-insurance-liable income and therefore does not generate Entgeltpunkte in the statutory pension insurance. This reduction is real over decades, even if it appears small per year, and should be weighed against the tax benefit and employer contribution, not considered in isolation.

The First Five Career Years: What You Decide Today You Will Only Notice in 30 Years

An ETF-vs-bAV calculator compares a single month. But what is decided in the first five career years about savings rate, tax benefit, and employer contribution plays out over decades. Two career starters, same income, different first decision.

In the first five years after starting your career something happens that is hard to make up later: the first decision between an ETF savings plan from your own net income and a betriebliche Altersvorsorge (bAV, occupational pension) via Entgeltumwandlung (salary conversion) is often made in passing, without anyone working out over 30 years how tax benefit, employer contribution, and return develop together. A comparison calculator that shows only one month or one year cannot make this difference visible, because it only emerges over decades.

The figures below are model calculations with plausible example assumptions about income, savings rate, and return. Your actual situation depends on your employer, your contract, and your income development. Miravel calculates with your own figures.

Why a single comparison is not enough here

An ETF-vs-bAV calculator usually answers one question: what is left over net this year? It correctly shows that Entgeltumwandlung via a bAV reduces taxable and social-contribution-liable income, and that many employers add a legally required contribution. What it does not show: how a lower but tax-advantaged amount with employer match develops over 30 years compared with a higher but non-advantaged ETF savings plan from net income, when both are invested differently and grow at different rates.

That timeline is precisely the point. A decision made in the first career year does not have an effect for one year but until retirement. Anyone who sees only today's net difference does not see what that becomes after three decades of compound interest.

Two career starters, same income, different first decision

Finn and Merle both earn around 3.400 euros gross per month in their third career year and both set aside 200 euros per month for retirement. Finn saves the 200 euros as an ETF savings plan from his net income. Merle converts 200 euros gross per month via Entgeltumwandlung into a bAV. Both start with a 30-year horizon to retirement.

Finn: ETF savings plan, full return, no tax deferral

What the Miravel model calculates for Finn's portfolio: at a monthly savings rate of 200 euros over 30 years and a modelled growth rate of 6 percent per year, the same planning return for equity ETFs used elsewhere in Miravel model calculations, the result is a portfolio value of around 202.000 euros. This figure comes directly from the simulation and responds to any change in savings rate, term, or return assumption.

Finn's 200 euros are already taxed net income. He pays no social contributions on this amount because he is saving it from his net salary, but also receives no employer contribution. On the later sale, capital gains tax applies to the price gains, minus the Sparerpauschbetrag and, depending on the fund type, partial exemption (Teilfreistellung).

Merle: Entgeltumwandlung, tax deferral and employer contribution, but a different product

Merle converts the same amount, 200 euros per month, gross via her employer into a bAV. Two statutory effects apply immediately: under §3 no. 63 EStG, Entgeltumwandlung remains free of income tax up to 8 percent of the pension insurance Beitragsbemessungsgrenze per year, for 2026 up to 8.112 euros per year. Under §1(1)(9) SvEV, additionally up to 4 percent of this ceiling, for 2026 up to 4.056 euros per year, is free of social contributions. Merle's 2.400 euros per year is well within both limits, so her entire contribution is free of both income tax and social contributions.

Employer contribution: since 2019 the employer must top up at least 15 percent of the converted amount in a bAV, to the extent it saves social contributions through the conversion (§1a(1a) BetrAVG). At 200 euros per month that is 30 euros extra, making 230 euros total monthly contribution into Merle's portfolio.
Assumed growth rate: bAV products frequently run through insurance or Pensionskasse contracts with guaranteed elements, costs, and a lower equity allocation than a freely chosen ETF savings plan. This model calculation therefore deliberately uses a lower return of 4 percent per year instead of Finn's 6 percent: an assumption that reflects the structural difference between the products, not a general statement about bAV returns.
Portfolio value after 30 years at 230 euros monthly contribution and 4 percent return: around 160.000 euros.
Deferred taxation: on payout in retirement the full paid amount is taxed as income; in addition, contributions to health and nursing care insurance typically apply to the payout. That is the price for the tax exemption during the accumulation phase.

What this calculation really shows

This figure does not say that an ETF savings plan is fundamentally better than a bAV, nor the reverse. It shows how strongly two paths diverge over 30 years with the same savings rate when tax deferral, employer contribution, and a different return assumption compound together. A calculator that compares only one year shows only that Merle's net burden is lower today. It does not show what that difference becomes after three decades, because it does not account for the return development, the deferred tax, and the time horizon.

It is also important to note what this calculation deliberately leaves open: the actual net taxation at payout depends on the individual tax rate in retirement, which cannot be reliably predicted over 30 years. And the assumed 4-percent return for the bAV is a model assumption for a typical pension contract, not a law of nature. Some bAV contracts, such as pure fund solutions without guarantees, can be closer to the ETF return; others with a high guaranteed element can be significantly lower.

What can actually be changed here

In the first five career years there are several levers that have a strong effect over 30 years but only become visible when considered together over the timeline, not individually:

Check the actual contract type of the bAV offered, because guaranteed elements, costs, and equity allocation vary greatly and directly affect the return assumption
Actively claim the statutory employer contribution of at least 15 percent if it is not paid automatically
Consider a combination of both: part of the savings rate via bAV and part via ETF savings plan, rather than committing to one path
Set the savings rate early and increase it regularly, because the time horizon is longest in the early career years and every delay costs disproportionate compound interest
When changing employers, clarify the portability of the bAV, because not every contract can be transferred under the same terms

Which of these levers makes a difference depends on your own income, the bAV contract offered, and your personal time horizon. This cannot be looked up in a single annual comparison. It requires a calculation that maps savings rate, tax benefit, employer contribution, and return together over decades.

Why the whole picture makes the difference here

Miravel does not only calculate what an ETF savings plan or a bAV brings net this year. It simulates your entire household over decades: income, tax burden, savings rates, portfolio development, all together at every point on the timeline. Precisely in the early career years, when the time horizon is longest and the decision most consequential, only this long view makes the difference between two paths visible that look similar at first glance.

Your data stays in your browser. Miravel does not tell you whether an ETF savings plan or a bAV is the right choice. It shows you what happens with your own figures over the next decades.

Frequently asked questions

Miravel simulates your savings decision not for one year but over decades: savings rate, tax benefit, employer contribution, and portfolio development together. Start free now.