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• New uniform tax treatment for pensionskassen, pensionsfonds and direct insurance. The contribution to these funding vehicles will be tax-free up to a limit of 4% of the social security contribution ceiling, which is Euro 63,000 in 2011, or annual contributions up to Euro 2,520 in 2011. An additional contribution amount of Euro 1,800 is also tax-exempt. Exception for unterstützungskasse: this vehicle has no contribution ceiling.
• Reduction of tax-free amounts in retirement. The taxable portion of employer and employee contributions will gradually be reduced. On the other side, the taxable portion of pension benefits to/from all employer-sponsored pension plans will gradually be increased.
• Restricted settlements of pension payments. The restrictions on the settlement of vested pension entitlements at termination of employment will be expanded to pensions in payment commencing payment in or after 2005.
• Transfers of employees' pension entitlements. Employees can require the transfer of their vested pension entitlements from their former employer to their new employer, in certain circumstances.
• Communication requirements. Upon an employee's request, employers should provide information about their normal individual retirement pension entitlement. The previous employer is also required to provide information on transfer value to the new employer when the transfer occurs.
• Continuation of employee contributions during unpaid leave of absence.
 

The implementation of the new tax law provides employment law provisions and strengthens employees' pension rights. It is thought to eliminate the different tax treatment between private-sector social security pensions and civil servants' pensions, and harmonises these two social security pension systems. It is expected that after the reforms, the employer-sponsored and private pension scheme will play a more important role in the social pension system.

In addition to the impact on the pension system, the tax exemption is expected to lower marginal labour tax rates and lead to an increase in work incentives. The reduction of tax-free amounts in retirement will raise the marginal tax rate on other forms of old-age income, especially capital income. As a result, the incentives to save will be reduced. Although the tax treatment of contributions and pensions are coordinated and labour income is guaranteed not to be taxed twice in the life cycle, some groups will suffer income losses compared to their current status during the transition period.