bAV: U-Kassen without insolvency protection

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 (
If a provident fund becomes insolvent, it can be very expensive. For the employer and in recourse for the consultant. Once upon a time there was a U-Kasse in Ratingen. Today, you can only find the liquidating insolvency administrator on the Internet for the XXX U-Kasse. The case was all over the press. Because the last official act of the owners of that U-Cash was to transfer the U-Cash assets to the Cayman Islands. The members of the U-Kasse, i.e. the employers, were not at all happy about this. The so-called Ausfallhaftung is borne in such a case by the employer ? a decidedly expensive bAV experience. Neither in the case of insolvency of the U-Kasse (a non-profit GmbH or foundation is also conceivable) nor in the case of embezzlement by the administrators does the Pension Security Association (PSVaG) step in, which means: a case of employer liability. For the financial intermediary or management consultant in matters of occupational pension schemes, this leads to a total risk of failure which must be explained. This threatens recourse.
Void agreements The German Company Pensions Act (BetrAVG) stipulates that the employees’ money must be invested “in equal value”. In principle, the capital saved for old age must not be burdened by unnecessary administrative costs. In the technical periodical of the expert federation ABA it stood at the beginning of of 2006 clearly and clearly: U-cashes cause ?unnecessary? additional costs. Consequence: All those models, with which coworkers are loaded directly or indirectly with the administrative costs of the U-Kasse in the context of a remuneration conversion, are (partial) ineffective, thus void. The invalidity of such agreements with employees is reflected in the contracts with the product providers or with the external sponsors of the company pension scheme. Much to the delight of all contracting parties, it will then be a matter of reversal. In practical terms, this means that the employer will reclaim all contributions paid and a standard capital market interest rate on these funds. In addition, there are potential damages from additional charges for taxes and social security contributions.
Love letter to U-Kasse The typical letter to the U-Kasse then states that according to §§ 134 BGB and the provisions of the BetrAVG both the deferred compensation agreement with the employee and the agreement with the U-Kasse referring to it are null and void, in particular due to a lack of equal value (additional administrative costs of the U-Kasse) and additionally due to zillmerisation of the reinsurance on the premises of the U-Kasse (also a reason for nullity due to a violation of a statutory prohibition of the BetrAVG). Some U-Kasse then state that no zillmerisation would take place because the insurance conditions state: ‘At the beginning of the insurance contract high costs arise? These costs are not charged separately, but are covered by the first premiums. ?? The ?competence? of the author of such ineffective tranquilizing pills from the feather of a U-Kasse recognizes the expert immediately, because straight this reference indicates the Zillmerung typically. The mediator trained at a ?private academy? is horrified. No, he was never informed about this. Also with the unions chaos prevails, because for example the metal pension in such a way specified stands in the fire. Weren’t there also commissions involved, paid from the converted money of the employees? And now everything is supposed to be ?null and (partially) void? The case is commonplace. Every year, about 20,000 limited liability companies go bankrupt.
A look through the stovepipe Let’s take an entrepreneur from Hesse. The managing partner (GGF) and his ten employees had opted for a U-Kasse. In the event of insolvency, the PSVaG will demand all the money from the U-Kasse, i.e. including the money for the GGF’s pension provision. In such cases, the PSVaG will often determine that the “reinsurance” of the employees at the U-Kasse is to be described as “underfunded”. The identified financial deficits are then in fact compensated with the pension assets saved by the GGF. And if something of the GGF’s assets remains with the U-Kasse, then the fate of this money is determined by the statutes and benefit plan of the U-Kasse. What is not infrequently missing: a provision that the (small) remaining assets from the U-Kasse cover of the GGF should go to him as a so-called person entitled to a pension. The GGF is then only left with the proverbial view “through the stovepipe into the mountains”.

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

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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