HR-Glossar
Wertguthaben (long-term credit account)
How German long-term credit accounts fund extended release from work, why they need insolvency protection and how they differ from working time accounts.
1. What is Wertguthaben (long-term credit account)?
A Wertguthaben is an agreement not to pay out remuneration but to accumulate it in order to fund a later release from work – a sabbatical, a period of caring or training, a gradual transition into retirement.
It is expressly governed by Sections 7b to 7f SGB IV and differs fundamentally from an ordinary working time account in that. Three features make the difference:
- The credit is kept in money, not in hours. - During the release the employment relationship continues; remuneration is paid out of the credit, and contributions fall due on it. Social insurance cover therefore continues. - Above a certain size, Section 7e SGB IV imposes a duty of insolvency protection – the credit must be secured against the employer's inability to pay.
Tax and contributions arise only on payment, not on contributing to the account. That distinguishes the credit account from salary conversion into an occupational pension, which concerns pension benefits rather than remuneration.
The second and third features are the ones that separate this from an unpaid sabbatical arrangement elsewhere: cover continues, and the security is mandatory rather than a matter of policy.
2. Origin and development
Long-term credit accounts arose from the wish for more flexible working lives and gradual transitions into retirement. The early models had a serious gap: if the employer became insolvent, the accumulated credit was simply gone – sometimes after years of foregoing payment.
The act on improving the framework for securing flexible working time arrangements, usually called Flexi II, closed that gap: since then binding requirements apply to insolvency protection, investment and portability. That turned a workplace arrangement into a regulated process.
3. Core principles and how it works
Kept in money
What is contributed is remuneration, what is kept is a sum of money. Growth and withdrawal are therefore unambiguously determinable.
Tied to the purpose of release
The credit serves to fund a release from work. Payment for other purposes is a disruption event with its own, less favourable treatment.
Employment continues
During the release phase the employment relationship continues; remuneration is paid, and insurance cover is maintained in every branch.
Insolvency protection is mandatory
Above a certain size the credit must be secured against insolvency – through trust models or a charge, for instance. Without security there is a risk of loss.
Portability
On a change of employer the credit can be transferred – to the new employer or, subject to conditions, to the federal pension insurance institution.
4. Who is Wertguthaben (long-term credit account) relevant for?
- Employees with long-term plans – a sabbatical, care leave, training, early retirement. - Employers wanting to offer commitment – a credit account is a strong instrument and a serious administrative undertaking at the same time. - Older employees – for a gradual transition into retirement. - HR and payroll – contributions, disruption events and the release phase are demanding to calculate. - Finance – investment, insolvency security and accounting sit there.
5. How it differs from related terms
- Credit account and working time account – the short-term account keeps hours for short-term balancing, without insolvency protection and without a contribution treatment of its own. The credit account keeps money for longer releases, with both. - Credit account and occupational pension – the pension funds benefits after leaving; the credit account funds remuneration during a release within an ongoing employment relationship. - Credit account and partial retirement – partial retirement has its own legal framework; a credit account can supplement it but does not replace it. - Release and unpaid leave – with unpaid leave the employment relationship is largely suspended; out of a credit account, by contrast, remuneration is paid.
6. Variants and adaptations
- Sabbatical models – accumulating over several years for a longer break. - Early retirement models – release before the pension begins, with insurance continuing. - Care and family time models – funding releases for caring responsibilities. - Transfer to the federal pension insurance institution – where no new employer takes on the credit. - Disruption event – payment outside a release, for instance on termination of employment; the treatment follows its own rules and is generally less favourable.
7. Advantages and challenges
Advantages
- Longer releases become plannable and affordable
- Social insurance cover is maintained during the release
- Tax and contributions arise only on payment
- Insolvency protection is required by statute, not a matter for negotiation
- A strong retention instrument, particularly for experienced staff
Challenges
- High set-up and administration effort, particularly for small businesses
- Insolvency security costs money and must be evidenced on an ongoing basis
- The disruption event is demanding to calculate and usually unfavourable for the employee
- Investment decisions bring responsibility and risk
- The boundary with the working time account is frequently missed in practice
- A long commitment – where life plans change, flexibility is limited
8. Best practices for implementation
Keep it cleanly separate from the short-term account
Two accounts, two legal frameworks, two sets of calculations. Mixing them loses the insolvency protection for one and creates effort for the other.
Set up insolvency protection from the outset
Not only on reaching the threshold. Retrofitting is more demanding than setting it up.
Write the disruption event rules in advance
What happens on termination, death or reduced earning capacity belongs in the agreement. The disruption event is the most likely case and the one nobody thinks about.
Outsource the administration where the business is small
Specialist providers take on the record-keeping, investment and insolvency security. For small businesses that is usually the only workable route.
9. Tips for employers and employees
For employers
- **A credit account is not a large working time account** – it has its own legal framework with its own duties
- **Be able to evidence insolvency protection** – it is mandatory and is examined
- **Regulate the disruption event too** – it occurs more often than the planned release
- **Settle portability** – on a change of employer the credit must have somewhere to go
For employees
- **Ask about insolvency protection** – without it a credit accumulated over years is at risk
- **Plan the release** – the credit is tied to its purpose, and a payment is a disruption event
- **Count in the effect on your pension** – during the release, remuneration is paid from the credit and contributions arise
- **Act when changing employer** – a transfer has to be actively organised
10. Conclusion
The long-term credit account is the instrument for extended releases – and it is something other than a large working time account. It is kept in money, it maintains social insurance cover during the release, and above a certain size it is protected against insolvency. Precisely those requirements make it demanding for small businesses, which is why the administration is usually outsourced there. The point most often missing from agreements is at the same time the most likely one: the disruption event.
For an international group two features distinguish this from a deferred compensation arrangement designed elsewhere. Cover continues – the person on release is still employed and still insured, which is the point of the construction. And security is mandatory: a scheme that relies on the employer's balance sheet rather than on a trust or a charge does not satisfy Section 7e SGB IV once the threshold is passed.
A note on sources: there is no official English version of SGB IV (checked on 2026-09-28); the German text is cited below and its wording governs.
Sources
- Section 7b SGB IV – Long-term credit account agreement (German original; no official English version) (opens in a new tab)
- Section 7d SGB IV – Keeping and administering credit accounts (German original) (opens in a new tab)
- Section 7e SGB IV – Insolvency protection (German original) (opens in a new tab)
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