By converting gross salary into tax-free benefits such as the Hrmony meal allowance, employees receive a higher net salary during their employment. Since pension entitlements are calculated based on gross income, salary conversion slightly reduces future pension entitlements. However, the overall financial advantage clearly outweighs this.
⚠️ Note: The following information is for your information only and does not constitute tax or legal advice. If you have questions, please contact your tax office directly. Employees can perform an individual calculation on the German Pension Insurance website.
How is the pension calculated?
The monthly pension amount is determined by the following formula:
Earnings points × Entry factor × Current pension value × Pension type factor
| Factor | Explanation | Affected by salary conversion? |
|---|---|---|
| Earnings points | Comparison of annual earnings with the average earnings of all insured persons | ⚠️ Yes – slightly reduced |
| Entry factor | Considers additions and deductions for early or late retirement | ❌ No |
| Current pension value | Value of one earnings point (currently €32.03 West / €30.69 East) | ❌ No |
| Pension type factor | Type of pension (retirement pension = 1.0, disability pension, etc.) | ❌ No |
Salary conversion only affects the earnings points for the years in which it was carried out – and only to the extent of the converted amount.
Benefit calculation: Net gain vs. pension gap
The following calculation shows four typical scenarios (assumptions: €3,000 gross salary, tax class I, no children, church tax liability, conversion until retirement at age 67):
| Age | Duration | Monthly conversion | Monthly net gain | Total benefit during conversion | Monthly pension gap | Pension gap (15 years) | Total benefit |
|---|---|---|---|---|---|---|---|
| 56 years | 11 years | €50.00 | €24.10 | €3,181.20 | €6.10 | €1,098.35 | €2,082.85 |
| 31 years | 36 years | €50.00 | €24.10 | €10,411.20 | €19.97 | €3,594.60 | €6,816.60 |
| 56 years | 11 years | €100.05 | €48.22 | €6,365.58 | €12.21 | €2,197.80 | €4,167.78 |
| 31 years | 36 years | €100.05 | €48.22 | €20,832.81 | €39.96 | €7,192.80 | €13,640.01 |
The result
- The monthly net gain during salary conversion clearly exceeds the later pension gap in all scenarios
- The longer and the higher the salary conversion, the greater the overall financial benefit
- At the maximum conversion amount (€100.05) and long duration (36 years), there is a total benefit of up to €13,640
Note: The above calculation is based on the current conditions of the statutory pension insurance. Inflation has not been taken into account. Since many future factors are not yet known today, an exact prediction is not possible.
Further information
- 📄 How does the salary conversion option work?
- 📄 Is the number of tax-free benefits via salary conversion limited?
- 📄 Can multiple benefit components be combined?
Any questions? Our Operations Team will be happy to assist you: 📧 operations@hrmony.de