bKV or bAV — what's the difference?

bKV and bAV are often confused because both are employer-sponsored social benefits. However, they serve entirely different purposes and apply to different stages of life.

The Fundamental Difference

Company health insurance (bKV) delivers immediate benefits: It provides employees with health care services on par with those available to private patients—dental prosthetics, eyeglasses, alternative medicine practitioners, and preventive care. The benefits are immediately noticeable and are used on an ongoing basis.

A workplace pension plan pays off in the future: It builds up retirement savings over decades. The benefits don't kick in until retirement, often 20 to 40 years after the plan is established.

Comparison of Core Properties

The Case for the bKV

• Immediate, tangible benefits — Employees receive reimbursements several times a year
• High visibility and recognition in everyday work life
• Tax-free up to the 50-euro monthly limit for non-cash compensation
• The Family Option extends the benefits to partners and children
• Strong impact on recruitment and retention among younger workforces
• Minimal administrative burden

The Case for Occupational Retirement Plans

• Long-Term Wealth Building for Retirement
• Tax- and social security contribution-free contributions during the savings phase (salary deferral up to 4 percent of the contribution assessment ceiling)
• Employer contribution of at least 15 percent is mandatory for deferred compensation plans
• Particularly relevant for older and high-earning employees
• An instrument that receives significant government support

A Comparison of Tax Logic

The bKV utilizes the non-cash benefit exemption limit (Section 8(2), Sentence 11 of the German Income Tax Act (EStG)) or flat-rate taxation (Section 37b of the EStG)—the benefit remains net-neutral and immediately available. The occupational pension plan operates through deferred compensation under Section 3 No. 63 of the German Income Tax Act (EStG)—tax-free during the accumulation phase, but taxed at a later date upon payout at retirement age.

Which Solution for Which Goal

When it comes to employee retention, recruiting, and providing immediate recognition, the supplementary health insurance (bKV) is the more effective tool—especially for younger workforces, who find the prospect of a pension in 30 years’ time rather abstract. When it comes to long-term financial security and wealth accumulation, the occupational pension plan (bAV) is indispensable.

In practice, the two are not mutually exclusive—many companies offer both: the occupational pension plan as a mandatory component of retirement planning, and the occupational health insurance plan as a visible health benefit that reinforces employer branding in everyday life. Companies that can only implement one and are looking for a short-term impact on employee satisfaction and recruitment usually start with the occupational health insurance plan.