The bAV problems:
Entrepreneur U. would like to sell his GmbH. The buyer is not willing to assume the biometric risks of the pension commitments as part of the “M&A share deal”. This according to the motto “who knows how long the pensioners will live and whether the reinsurance is really sufficient”?
The same problem arises in the case of anticipated succession, because the heir often does not know whether he or she is in fact entering into an over-indebtedness. Mortality tables change – the advisor is overwhelmed by the calculation: Which yield should he use for the calculation?
One of the main emotional problems is the fact that, “contrary to all the advertising promises made by some insurers”, pension commitments are by no means really insolvency-proof. The entrepreneur U. would therefore like to bring “his money saved in the reinsurance into safety”.
Resourceful occupational pension consultants also offer solutions for outsourcing the pension commitments of “normal” employees, i.e. those with PSV protection, to a separate company, which can then quietly go bankrupt years later “after a liability has lapsed”.
These are all examples of conceivable motives for spinning off the pension commitment from the company.
A lawyer thought he had the solution:
Namely, the “pensioner GmbH”. This worked at times, but then things turned out differently than expected.
Decision:
The district court of Hamburg put a spanner in the works of the resourceful advisors by a decision dated 01.07.2005 (file no. HRA 100711). The competent judge recognised razor-sharp and with remarkable precision in the detailed reasoning that here the pensions were to be outsourced bypassing the PSVaG, without the necessary permission of the PSV. What reads as masterful reasoning to the expert lawyer is of considerable importance in practice:
Without the consent of the PSVaG, the model does not work for normal employees or pensioners. And it will never work, because the PSVaG generally refuses to give its consent. In the present case, it is obviously a case of malpractice on the part of the notary, and presumably also of other advisers involved.
Strategy:
There is nothing wrong with the effort to separate the pension commitment from the AG or GmbH – i.e. to separate the pension provision from the business risks. The advisors have recognized what the hour has struck. The Federal Court of Justice (BGH) made it clear in its decision of 7 April 2005 (ref. IX ZR 138/04) that the insolvency administrator can withdraw the reinsurance of the (allegedly insolvency-proof) pension commitment. From the entrepreneur’s point of view, this applies analogously to the time value account, which is also “insolvency-proof” according to the advertising.
The insolvency administrator can offset and/or – like other creditors of the GGF – seize with a title. In case of doubt, the pension provision is thus simply lost for the GGF and any de facto managing directors. Withdrawing the reinsurance of the pension commitment from the access of the (possible later) insolvency administrator is certainly an economically sensible approach from the entrepreneur’s point of view. It is too short-sighted, and therefore incorrect from an adviser’s point of view, not to know § 4 I BetrAVG. After the decision of the AG Hamburg, the advisors must now allow themselves to be held responsible for this. The goal was economically sensible – the implementation unfortunately suboptimal.
The solution approach:
In such cases, no contractual arrangement – bypassing the PSVaG – may be constructed. Economically, the issue is one of capital preservation for the company and retirement planning. In addition, there is a risk that the pensioner GmbH, which can be found in practice, may become insolvent after the limitation period for liability has expired. This would then be – insofar as the protection of the PSVaG according to § 17 BetrAVG can intervene – a legal arrangement to the disadvantage of the PSVaG. For the GGF and the occupational pension consultant, § 4 IV BetrAVG offers two ways to change the implementation path – the pension fund and the liquidation insurance. The liquidation insurance can be structured in such a way that it also secures a garnishment-free minimum subsistence level for the GGF (and his family): With regard to the reinsurance of a pension commitment, a pledge hardly protects.
Business opportunity for the occupational pension consultant:
The financial services provider will see an opportunity here to implement considerably more by reinsuring the entire reinsurance policy. For the numerous companies in the SME sector, whose equity ratio is tending to fall and whose pension commitments often cannot be financed, a mostly tax-free option for “restructuring the pension commitment” is opening up. The primary target customers of the financial service provider are, of course, companies prior to insolvency – and especially those entrepreneurs who have tried to build up their (almost) entire pension provision through a pension commitment: Usually the desire for a change of the circumstances begins, if the thought – in the case of the GmbH insolvency – as GGF with empty hands to stand there, leads with the entrepreneur to noticeable uneasiness.
Duty to advise:
The BGH ruling of 07.04.2005 shows that advertising with the words “By pledging the reinsurance policy to you and your surviving dependants, private law insolvency protection can also be achieved. ” can be unrealistic in practice. The financial services provider is on the liability front and must provide information about specific risks of the investment models brokered. The financial service provider must ascertain the customer’s knowledge and clarify the customer’s willingness to take risks, cf. BGH ruling of 04.02.2002 (Ref. III ZR 237/01). It is not sufficient to hand the client a sealed envelope together with the pension promise, inscribed with the note “For difficult hours – to be opened in case of emergency”. The proverbial welfare application contained in such an envelope must be discussed with the client as a “worst case scenario”. Finally, the financial services provider must recognise that the advertised insolvency protection appears to be legally incomplete and thus implausible. Documentation is required here.
by Dr. Johannes Fiala
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About the author
Dr. Johannes FialaPhD, MBA, MM
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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