The Federal Court of Justice (BGH) decided in its ruling of 15.11.2007 (Ref. IX ZB 89/05) that private insurance pensions (e.g. accident or occupational disability pensions) or pensions (so-called private old-age provision) of former freelancers or self-employed persons do not enjoy any protection against seizure.
This is also the case for self-employed persons and freelancers who relied on the “fairy tale” that their company pension scheme was protected from the access of the insolvency administrator or from creditors by pledging it. The BGH expressly allows the insolvency administrator to collect the reinsurance policy – despite effective pledging and vesting (Case IX ZR 138/04).
Garnishment protection: Insurance contract privilege only for employees and civil servants
In principle, therefore, only pensions and retirement pensions are covered by attachment protection. This is owed by the employer or an employer. Only then can the garnishment-free amount of around 900 euros for single persons or less than 1400.00 euros for married persons be applied. As far as no pension payments or pension claims are concerned, there is “no room for the attachment protection of pensions from the outset”.
No protection for the family in the case of old-age provision via insurance either
The BGH clarifies that only employees and civil servants who have established an old-age provision under insurance law for themselves or their dependants can also be granted enforcement protection for this. This refers exclusively to private pensions which replace a retirement pension or a survivor’s pension, i.e. insurance benefits which are “established on the occasion of leaving a service or employment relationship”. Therefore, continuing pensions of freelancers, self-employed persons, or persons who have not worked are not protected.
In case of insolvency of freelancers and self-employed: Go to the social welfare office
Professionally self-employed persons can only build up a small amount of garnishment-free insurance assets within the framework of section (§) 851 c ZPO. As a rule, however, these pensions will be so small that supplementary social assistance will come into question.
Broad legislative discretion – or unconstitutionality?
The Federal Court of Justice considers this unequal treatment to be constitutional: “On the one hand, the self-employed still appear to be less in need of protection today because the higher earning opportunities regularly associated with the exercise of their activity also suggest a more extensive claim under enforcement law. On the other hand, self-employed persons are free (§ 7 of the Social Code, Book VI) to acquire pension payments (cf. BGH, decision of 25 August 2004 -IXa ZB 271/03, NJW 2004, 3771) with attachment protection (§ 54.4 of the Social Code, Book I, §§ 850 et seq. of the Code of Civil Procedure) by joining the statutory pension insurance scheme. The legislature is therefore not required to treat every permissible independent arrangement of old-age provision in the same way under enforcement law.”
Constant need for advice for freelancers and self-employed persons
At the beginning of 2007, a member of a social committee said that a legal amendment would not find a majority in the Bundestag. The BGH also suggests the argument of the “higher responsibility and maturity” of the self-employed and freelancers. Consequently, it is up to the people concerned to orient themselves and to shape the circumstances themselves. Only experts can master such questions.
Asset Protection” solution approach for self-employed and freelancers
Asset protection begins with the separation or formation of different asset spheres. In the professional sphere, this means operating a professional risk management system, if possible combined with your own liability assets – separate from your private assets. However, private assets can also be protected from creditor access in certain areas.
Greater responsibility and maturity of the self-employed and freelancers
At least this touches on complicated solutions, i.e. including foreign countries or foundations, trusts and own funds. The “higher responsibility and maturity” means for self-employed and freelancers to realize that the solution does not always have to be domestic. And another bitter pill is connected with it: The mediator of private and company pension schemes often served the freelancer and self-employed with half-truths that were not better learned, because more truth was not conducive to sales. Wonderful “sample forms” suggest an apparent security, which unfortunately does not exist at all.
five to twelve
Trying to move assets to a safe haven at the last minute when insolvency is imminent is usually too late. That is why those affected must arrange their own assets and provisions in good time. The product seller rarely has the solution that is really viable in the end. Doctor Johannes Fiala, Munich www.fiala.de/rechtsanwalt
(Landpost 18/2008, 25)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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