Company pension scheme (bAV) and working time account models (ZWK) – No asset protection in the event of insolvency of the company through trust/CTA models

*by Dr. Johannes Fiala, lawyer (Munich), mediator (Univ.), MBA Financial Services (Univ.Wales), MM (Univ.), certified financial and investment advisor (A.F.A.), EC expert (C.I.F.E.), lecturer for civil and insurance law (Univ. of Cooperative Education), banker ( and Peter A. Schramm, actuary DAV (Diethardt), graduate mathematician (Univ.), expert for actuarial mathematics, publicly appointed and sworn by the IHK Frankfurt am Main for actuarial mathematics in private health insurance (
If you don’t want to change anything, you also lose what you already have. (Professor Nagel)
The following story really has absolutely nothing to do with living initiators, “clearinghouses”, underwriters and brokers. similarities with still living or already insolvent parties would be purely coincidental and are in no way intended here. For the entrepreneur, the following applies: “Anyone who relies on pledging and trust models for insolvency protection of company pension schemes, partial retirement or working time accounts is, in case of doubt, looking down the proverbial stovepipe into the Bavarian foothills of the Alps”. Who does not want to recognize these risks in the supply, loses in the case of emergency, what he already has – namely everything ! If you don’t believe this, just read the report of the German Bundestag (Petitions Committee) from 2005, and the files at the insolvency court.
Pledge model as insolvency protection lie?
There is talk of a huge need for advice in the occupational pension market. The pension commitment is often not “fully funded” – later the insolvency administrator collects the complete reinsurance, as the BGH has allowed. The strategic error in the insurer’s legal department was simply to conceal the potential for damage to the executive to be covered. Meanwhile the agent – himself only a salesman trained according to the sales advertisement – had lulled the managing director into security: “the pledge is insolvency-proof” – With nichten ! The insolvency administrator “calculates”: Social benefit II is on the cards, dear entrepreneur – 0.0 euros are left over from your reinsurance with life insurance and pension. The protection of an occupational pension scheme for the entrepreneur in insolvency is (unfortunately?) not widely accepted in Germany. No legal regulation protects the standard of living – this is felt by over 35,000 entrepreneurs in insolvency every year, as can easily be seen from the pages of the Federal Statistical Office (
Domestic solution?
The solution does not always have to be domestic – a look at dissertations makes it easier to find the right solution: via foreign countries, insolvency protection costs a little more, compared to life insurance in Liechtenstein, which is not always protected against insolvency. The prices vary from “from 2000 Euro” to “not less than 1%” for the installation – after that a wide field opens up, because it can cost many times more. The layman thinks that the (wealthy) Germans move their money abroad to evade taxes – a sport that is widespread in one way or another. But that’s not what it’s about: it’s about bare existence, the “nest egg”. Who likes to go to the welfare office when the company is suddenly broke?
Trust models?
Resourceful “experts” have come up with a new sop, the double trust, also called the CTA model (Contractual Trust Arrangement). This is a model which works in the USA under the legal conditions there, but which involves a number of risks when transferred to Germany. This is intended to remove capital and provisions for occupational pensions from the balance sheets in the USA, which is not possible in Germany anyway under the German Commercial Code. Also, creditor protection in Germany has a much broader scope than in the US – and this has implications. The apparent security lies in the fact that the employer/entrepreneur agrees a “management trust” with a trustee – in insolvency, the new boss in the ring here later will be the insolvency administrator. In addition, there is then a “security trust”: the trustee also concludes an additional contract with the employee or manager. Even that is practically useless when it comes to the “big bang”. If you plot or draw it out – a triangular relationship. And where does the trustee stand: Well in the middle, more precisely in the conflict of interest. This will be discussed later, because the model is probably a “pre-programmed failure”, and for the perhaps unsuspecting intermediary the “super disaster, a liability bomb – usually without insurance cover”. But first of all about the supposedly “safe” double trust: If the company becomes insolvent, the insolvency administrator will want the money from the trustee, and so will the employee/manager. One has the money, two want it.
No one can access the money from the pension scheme and the ZWK:
The practice is that nobody gets it: the trustee will simply deposit it according to the motto “let the insolvency administrator argue with the employee/managing director”. The ex-managing director will feel cheated, since the model was sold to him as absolutely insolvency-proof. After all, he had waived his salary for years – and paid trustee fees, as well as something for the bad advice. Wasn’t there this fine sales document – from the time value account provider and the insurer? So now it’s welfare’s turn after all (for now?)? Employees/managers are blindsided when they are told by their lawyer: “The conceptionist has deceived you. It is forbidden under professional law for both a StB trustee and a RA trustee to be active in a collision. As a practical matter, you paid the expensive fiduciary fees even though it was clear from the outset in law that the fiduciary would be liable to prosecution in the event of insolvency.” The secure trust was nothing more than a sales gimmick from the beginning.
unserious conceptionist?
Let’s take Pfefferminzia, a noble shop with the best address, in the “special department” sits a head of sales and trumpets “We have had this checked by the renowned law firm Hieb, Stichfest&Partner – the matter is insolvency-proof”. Too bad the practice is different. The head of department is a distinguished business economist, has no idea of law, but he does not give the opinion of “his lawyer” to any intermediary: they should rely on his word, and sell and be liable themselves – no one can check the plausibility, how could they? The sales manager does not consider the expert opinion to be sales-promoting and therefore neither relevant nor its contents useful in training needs. The manager wants to hold the intermediary liable. The points out that unfortunately he himself is already in private insolvency. He never had liability insurance – he wasn’t required to, because he’s not an insurance agent. If everything goes well, then agents and managing directors will later show solidarity, report the training and sales manager – and sue him, above all personally: the lawyer will then already pull the model judgements out of the drawer, because they already exist. The accusation is “intentional immoral damage” – but the employee/manager will need a lot of patience until the final judgment. similarly the proceeding of the time value account offerer ?doctor light foot?: On training documents it refers to a allegedly ?renowned Kanzlei? (in reality that is broke) and a professor appraisal (however nobody can recognize whether this refers actually to the advertised concept). Again, the middleman has the buck firmly in his hands with both hands – he can’t check plausibility. But you have to live on something – even if it’s unchecked and uninsured. The broker hopes that a claim never occurs – it would cost him his livelihood, possibly even criminal proceedings; the product provider has simply factored it in, but rarely the damage caused by the press frenzy. Nullity in the case of a (double) trust agreement? So, if the entrepreneur goes into insolvency, then as a managing director-shareholder (GGF) he wants to have “his money”, namely his retirement provision. But so does the insolvency administrator, because he will always find a managerial liability to claim the money also for himself, his insolvency estate. The trustee is literally caught between two stools, and unfortunately this is the practical rule. The trustee deposits the money, and the dream of the insolvency-proof GGF pension scheme or the bankruptcy-proof working time account is over. Too bad too, isn’t it ? Now – finally – the GGF thinks and inquires: The trustee, a passable tax consultant, has been in collision from the beginning. He’s liable for that. He is not insured, it then becomes clear later. The professional code of ethics forbids you to sit between two stools. The risk of criminal liability is high – the intermediary is accused of complicity and aiding and abetting. Too bad that then also the – if existing – liability of the agent pays nothing. Entrepreneurs and intermediaries had failed to ask the right questions from the start. But that can be learned – in this case with a huge contribution to the “Research and Development” department. The initiator has long had his money in the Cayman Islands. Doktor Leichtfuß has moved to an unknown address – the agent sits here with his customer and ponders what went wrong and how he is now supposed to pay the legal costs? The lawyer comments: No no Mr. Client, your money is not gone, only someone else has it – and he is far away from here. If you’re lucky, the insurer, U-Kasse, and other “still living” parties will be liable to you. The best thing to do is to get a credit check – because your broker has failed to do this as an elementary duty from the very beginning. Oh yes, where did the sympathetic sales manager suddenly disappear to? Shaping the future? How to do better – first by testing the concepts. That costs money – but less than losing everything. Advisors and intermediaries should be insured, with proof, for each statement. Above all, it must be investigated which statements are not insurable at all – and above all, who is “Doctor Lightfoot”, x-fold previously convicted and at the time a free man? As the saying goes “he who puts himself in danger – perishes in it”? If you don’t like to check the plausibility, you will lose everything in doubt, even what you already have. Consultants and agents are liable for up to 10 years (statute of limitations), often uninsurable or without insurance coverage. In the end, the question will always be who is left sitting on the damage in the liability merry-go-round? Before that, however, the entrepreneur had probably lost everything and not even money for the lawyer’s and court costs – today he is annoyed that he had not changed anything. In the meantime, the public prosecutor has discontinued the preliminary proceedings against Dr. Leichtfuß – currently released from pre-trial detention on bail paid by a new initiator: the punishment to be expected would only be minor compared to that already to be expected from other proceedings.
( on 05.03.2007)

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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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