Q&A with Alte Leipziger on the German Employee Benefits Landscape

Insurope’s Network Member in Germany, Alte Leipziger Lebensversicherung (‘Alte Leipziger’), is one of the leading partners of local and multinational companies when it comes to employee benefits. We recently sat down with the team to discuss the unique market landscape in Germany.

Q: Why is Germany considered an attractive business location for multinational companies, and what are its key strengths and challenges?

Germany offers a compelling environment for business, driven by a high level of innovation, a well-trained and skilled workforce, and a central location in Europe that supports easy access to major markets. It also benefits from strong political stability and security, which adds to its overall predictability, an important factor for foreign investors.

At the same time, there are challenges to consider. High energy prices, administrative bureaucracy, shortages of skilled workers, infrastructure constraints, and slower digitalization can create obstacles for companies operating in the market.

Germany’s economy is anchored by key industries such as the metal and electrical sector, the chemical and pharmaceutical industry, and the food industry. There is also growing investment in the data center sector, reflecting the country’s evolving digital landscape.

Foreign investment remains strong. In 2025, foreign companies invested approximately €96 billion in Germany, more than double the €43 billion invested the previous year. Additionally, the number of foreign-controlled companies increased by 45 percent between 2020 and 2023, underscoring continued international confidence in the German market.

Q: Tell us about Germany’s employee benefits market right now?

The German occupational pension market is one of the three pillars of the country’s provision system for retirement, invalidity and death, complementing the statutory pension scheme and private provision. Historically it is characterized by strong employer involvement, especially in respect for multinational companies in Germany. This approach was adapted by German companies, too. However, most of the employees still do not have enough additional provision from occupational pension schemes. Due to this reason legislation has tried to encourage employers and employees to build provision from occupational pension schemes. With five main implementation methods (direct insurance, employee pension insurance fund, employee pension investment fund, support funds, and direct commitment) there is a flexible basis for this target. In recent years, the market has been shaped by low interest rates, increasing regulatory complexity, and the introduction of defined contribution-like models under the Betriebsrentenstärkungsgesetz (BRSG I and II). Despite broad coverage, especially in large companies, there remains significant growth potential among small and medium-sized enterprises.

Q: What’s unique about the German employee benefits market?

The German employee benefits market is distinctive because of its strong regulatory framework and close integration with the social security system. However, German employee benefits allow a very flexible system for companies to run pension plans. In this context the German employee benefit law, relevant collective bargaining agreements or works council agreements must be observed, as the case may be. Additionally tax and social security incentives are basically applicable to all pension plans in Germany. This all leads to the positive effect that rather than purely employer financed plans, jointly financed plans by both - employee and employer - are common. Especially the employee’s legal right to convert a part of their salary into benefits (salary sacrifice and conversion into employee benefits) supports the provision but shifts responsibility and opens the chance towards the individual having higher provision from employee benefits, specifically for retirement.

Finally, the market is comparatively conservative and insurance-driven, with a strong preference for guarantees and long-term security—though this is gradually changing as low interest rates and regulatory reforms push providers toward more flexible, capital market–linked solutions still within the insurance sector.

Q: Are there any recent regulations impacting the market?

At the end of 2023, only 51.9% of the total 34.9 million employees subject to social security insurance had an active company pension plan, according to the Arbeitsgemeinschaft für betriebliche Altersversorgung (Working Group for Occupational Pension Provision). With the goal to increase coverage and attractiveness of occupational pensions, the Second Act to Strengthen Occupational Pensions (commonly referred to as BRSG II) was introduced and largely in force since January 2026. When it comes to occupational pension schemes, the main aim is to make them more attractive and easier to access.

The upcoming BRSG II aims to achieve this goal. It is focused especially on higher retirement pension due to the use of capital markets during the employee’s expectancy phase, of course with contribution security at retirement date, easier auto enrolment with opting out feature, strengthening collective schemes through scale and incentives for low-income workers. Overall, the direction is toward broader coverage and more flexible designs while maintaining a highly regulated framework.

Q: Where does Alte Leipziger sit in the German life insurance market?

Alte Leipziger Life is a top three player in the German employee benefits market. That position reflects long-term stability, deep local roots, and consistent performance for many decades, especially in benefits that are core to multinational pooling, such as pension, life and disability.

Q: How is Alte Leipziger adapting to change in the market?

The German market is evolving where digitization, rising employee expectations, and more complex multinational needs are changing how benefits are delivered. Alte Leipziger is modernizing while staying focused on what matters most for multinational pooling: strong risk management, reliable local service, and benefits that support employees over the long term.

Q: What does this mean for multinational employers?

Germany remains an important market in any European employee benefits strategy. The right local partner makes a real difference, helping multinationals navigate regulation, deliver meaningful benefits to employees, and connect local plans into a broader multinational pooling strategy without losing the human touch.