Information irrelevant Contracts for occupational pension schemes are a recurring concern of the courts.

In 2005, for example, the Stuttgart Labour Court awarded compensation to a personnel manager who had not been precisely informed by his boss about the contractual agreements (Az 19 Ca 3153/04). The current ruling now goes one step further.

This was because the car dealership owner had dutifully informed her employees about the terms of the salary conversion. Although the lower court, the Rosenheim Labor Court, had still ruled on whether this clarification was sufficient, which was disputed between the parties, this fact was irrelevant for the Munich Regional Labor Court:

Contracts with Zillmerisation in the context of deferred compensation were inadmissible in any case.

reasons enough

The court was not stingy with arguments when handing down the verdict.

“The court based its ruling on four legal grounds; even one would have been enough,” says Dr. Fiala.

First, zillmerized contracts violate the requirement of equal value. Secondly, employees would be unduly disadvantaged. Thirdly, the portability of occupational pension contracts is not always possible and fourthly, the Federal Court of Justice and the Constitutional Court had already ruled that such zillmerisation violates the contractual objective of capital accumulation.

Search for alternatives Many options for occupational pension provision via salary conversion are now no longer available following the ruling from Munich. If the verdict is final. Insurance industry products are unlikely to meet the strict requirements. Banks have a better chance with classic interest-bearing investments. But even lucrative fund investments could be down because of front-end loads. Apart from that, by its very nature, no fund can guarantee stability of value.

by Dr. Johannes Fiala

courtesy of

from www.freenet.de (published on 06.06.2007)