The contribution rate that German employers must pay into the country’s pensions lifeboat fund, Pensions-Sicherungs-Verein VVaG (PSVaG), has jumped to 1.2‰ for 2025, following a sharp rise in corporate insolvencies and ongoing economic stagnation.
The levy rate – up from just 0.4‰ in 2024 – remains below the 10-year average of 1.9‰, but reflects a clear uptick in claims against the scheme.
“In line with the general trend, we are seeing an increase in the number of insolvencies,” Marko Brambach, PSVaG’s member of the executive board, told IPE.
Preliminary data from the Federal Statistical Office show that insolvency proceedings in Germany rose 6.5% year-on-year in October. The number of corporate insolvencies has been rising steadily since the COVID-19 pandemic and the resulting economic stagnation.
Contribution rates had spiked to 4.2‰ when the pandemic hit in 2020, before easing back to 1.8‰ in 2022 and 1.9‰ in 2023.
“By far the most frequent cause of insolvency for companies is impending insolvency. In our assessment and experience, this reason for insolvency applies less frequently to companies with pension promises than to companies without occupational pension schemes,” Brambach added.
The Federal Financial Supervisory Authority, BaFin, continues to monitor pension fund solvency to “ensure that pension funds remain stable even in crisis situations”, according to PSVaG.
Rebound on the horizon
The European Commission this week forecast that Germany’s GDP will return to growth in 2026 and 2027, at a rate of 1.2% a year.
PSVaG said it expects to collect approximately €482m in contributions this year, compared with €157m in 2024, due to the higher levy. Its annual report, due in April 2026, will include a more detailed insolvency outlook for next year.
Employers will also make additional contributions to PSVaG’s compensation fund covering pension promises backed by Pensionskassen, one of Germany’s main occupational pension vehicles.
Brambach said the pension scheme will continue to provide “stability and reliability” for pension beneficiaries. But he warned that rising insolvencies would mean “significant claims expenses” for PSVaG and greater funding pressure on participating companies, who must provide funds “annually and on a solidarity basis, to secure the company pensions of newly insolvent employers”.
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