Loss of company pension scheme for managing directors in the event of insolvency
The company pension scheme has increasingly become the focus of public interest in recent years due to changes and adjustments in pension policy. Politicians are increasingly shifting the issue of pensions into the personal responsibility of employees and employers, which means that these crafted insurance brokers and crafted credit institutions are usually left uninformed. At this point we would like to refrain once again from mentioning the well-known disadvantages of the various occupational pension schemes in terms of their profitability and refer to our article “die betriebliche Altersversorgung” for further information on this subject. Rather, in the following article we would like to point out the most common pitfalls and problems in company pension schemes of managing directors and shareholder-managing directors.
Our many years of experience show that the topic of company pension schemes is treated extremely negatively in most companies and groups. When choosing the suitable occupational pension model and selecting a suitable provider, the management blindly trusts the insurance brokers they trust, without being aware of the possible consequences for their own pension or that of their employees. The fact that this topic can even mean the decline of an entire company is often insufficiently known to the employed managing director and shareholder-manager. True to the motto “it will go well“, many of those responsible temporarily withdraw from their responsibilities, because in most cases wrong decisions only become apparent many years after the contracts have been signed. We have encountered the following cases with our clients in recent years and would like to draw your attention explicitly to the problem.
Reduction of benefits by the pension institution
Unfortunately, we have to note that in recent years approx. 30% of pension funds have reduced their benefits, and the trend is rising. The consequences for employers and entrepreneurs, not only for their own pension, can be devastating. Much to the regret of those responsible, the difference in performance, based on the legal obligation of companies to pay their debts, must be compensated from the company’s capital. If the company has insufficient reserves or does not have sufficient capital, this obligation can lead to the insolvency of the entire company. We know from experience that most companiesturn a blind eye to this liability risk and have usually not covered their obligations to employees in a solid way.
Insolvency of the own company and the loss of the baV
There are many constellations that can lead to a insolvency of a company and not always those responsible are partly to blame. Tragic enough when a company is on the brink of collapse, but what about the Security of the concluded occupational pension contracts ordered.
Time and again in the past we have had to witness how, after a company bankruptcymanaging directors and managing partners were not only faced with the shattered state of their own company, but were also confronted with the painful reality that concluded contracts for pension commitments are not safe from the insolvency administrator. A judgement of the Federal Supreme Court (BGH judgement of 18.07.2013, file no. IX ZR 219/11) even expressly allows the insolvency administrator to access the assets of the GmbH to reinsure the pension scheme. Here, too, there are possibilities to become active in advance and to ensure a solid security of your own pension. Talk to us with pleasure!
Loss of the company pension due to bankruptcy of the occupational pension scheme's owner
Yes, you have read correctly, not only your own company can suddenly be faced with the end of its existence, but also the provider of your company pension scheme can mean the total loss of your company pension scheme in the event of bankruptcy. In principle, it should be noted here that this scenario has already frequently been the case in the past, and that even vseemingly large carriers/providers were affected by occupational pension products. In our following overview of the models of the baV, you will find out which models do not have any protection in case of bankruptcy of the carrier.
Company pension scheme for managing directors and shareholder-managing directors: Overview of models
Fundamentally, the models/options for a occupational pension scheme for managing directors do not differ from the available models for regular employees. However, we would like to point out at this point that the pension funds and direct insurance companies do not contribute to the PSVaG (Pensions-Sicherungs-Verein) and therefore no security is available in the insolvency case. For a better overview and classification the models of the bAV: you will find below
- Support Fund
- Direct insurance
- Pension Fund
- Pension funds
- Pension commitment / direct commitment
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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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