by Johannes Fiala, Lawyer (Munich), M.B.A. (Univ.Wales), M.M. (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Banker (www.fiala.de )
Revocable subscription right
In the event of insolvency, the employee does not have a right to separate satisfaction in respect of a direct insurance policy if the subscription right is designed to be revocable. This is true even if it is an employee-financed deferred compensation plan.
GGF without insolvency protection
In its ruling of 18 July 2002 (ref. IX ZR 264/01), the Federal Court of Justice (BGH) decided a dispute between an employee and an insolvency administrator. An insured event had not yet occurred. The BGH came to the conclusion that in the case of a revocable subscription right, the employee only has an ordinary insolvency claim which must be registered or can only be satisfied in accordance with the insolvency quota.
The ruling of the Federal Court of Justice burdens the GGF (as an employee who does not fall within the scope of the BetrAVG) with the insolvency risk of his company if a direct insurance policy is equipped with only a revocable subscription right. The contributions to the direct insurance paid out of the employee’s salary thus fall into the insolvency estate.
The broker’s liability can be particularly tricky here, because according to the Sachwalter ruling, the insurance broker also has a risk monitoring and follow-up obligation. The normal broker mistakenly believes that vesting in the case of salary conversion leads to insolvency protection: In the case of the GGF, however, it is imperative to ensure that the subscription right is irrevocable.
Protection of normal employees Normal employees fall within the personal scope of application of the Occupational Pensions Act in accordance with Section 17 of the BetrAVG. As a rule, insolvency protection only applies to these under the conditions specified in § 7 of the German Occupational Pensions Act (BetrAVG). The insolvency risk is low for this group of persons, because only cases in which there is an irrevocable subscription right and at the same time no economic impairment of the occupational pension entitlement are not protected against insolvency. However, cases of cooperation between the contracting parties in the case of an insurance contract loan can be problematic.
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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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