“The right has the curious property that you can keep it without having it.” (Joseph Unger)
Particularly in the case of deferred compensation, it is advisable to choose a reinsured provident fund (U-fund) as the carrier in the company pension scheme (bAV). However, experts agree that this involves additional acquisition and administrative costs that are avoidable. The consequence is the (partial) nullity of the contracts !
Difficulty in explaining the question of equal value: Most U-Kassen run into difficulties in explaining their position when they are told that both the salary conversions between employer and employee and the employer’s contracts with the U-Kasse are regarded as invalid or partially invalid.
U-Kasse in the tax audit: Tax liability for the employer For a secretary, 100 euros were transferred to the U-Kasse every month from February 2002. At the end of 2005, the tax auditor from a special department of the Oberfinanzdirektion (OFD) appears and forces the U-Kasse to change its funds “from “investment-oriented” (endowed) to “security-oriented-guaranteed” (reinsured)”. The OFD criticized the tax arrangement – the entrepreneur knew nothing about the details until then, of course. In this case, the U-Kasse members were threatened with tax liability due to the refusal to deduct the costs as business expenses.
Fee tariff with commission and Zillmerung While the U-Kasse reassuringly writes “no Zillmerung, pure fee tariff”, a close examination reveals that the U-Kasse does not only take 8% of the income from the converted salary. There are further differences between paid-in premiums and actuarial reserves. In mid-2006, paid contributions in the amount of 5,200 euros were offset by proportional U-Kasse assets in the amount of 4,465.83 euros. The unexplained difference had thus amounted to 997.00 Euros, after all about 22% was missing in relation to the cash assets.
The actuary does the math: Exact damage 1064 Euro Lucky for the agent that the U-Kasse then decides to reimburse the missing money – plus the costs for the actuarial expert. A lawyer’s letter had sufficed, including the ready complaint. Apparently, the U-Kasse didn’t want a judgment.
Of course, it does not matter whether the respective administrative fees of the provident fund as well as the costs of the insurer due to biometric risks are still to be regarded as reasonable in the present case. The minimum surrender values that would have to be granted due to ineffective clauses on the offsetting of acquisition costs according to the Federal Supreme Court – and would even be given here – also have nothing whatsoever to do with the problem at issue here.
Similarly, it does not matter that the contracts also generate investment income that at some point approaches the amount of the deducted costs – the costs nevertheless have an even greater effect right up to the end, their effect does not simply dissolve into “nothing”.
The decisive factor is that the principle of equality of value in sec. 1 subs. 2 No. 3 BetrAVG must also be observed during the vesting phase. For it is precisely in the case of a now almost everyday premature termination of the employment relationship (the average duration of such a relationship today is just under five years) or an interim change in the structure of the employee-financed occupational pension scheme, as occurred in the specific case, that the employee is particularly burdened by zillmerisation or similar offsetting methods with the same effect. Legal consequences are then invalidity of the contracts, and liability from unjust enrichment (§ 812 BGB) and for damages. Of course, a U-Kasse is also liable for its intermediaries, because they are regularly vicarious agents.
Employer as trustee The Düsseldorf Higher Regional Court stated in its judgment of 6 March 1992 (17 U 201/91) that the employer is to be treated as a trustee vis-à-vis its employees in the context of deferred compensation within the meaning of Section 1a of the BetrAVG. According to the Stuttgart Labour Court (judgment of 17.01.2005, 19 Ca 3152/04), the employer is also obliged to protect the employee’s assets as a result of his duty of care under his employment contract. Accordingly, the employer is obliged, among other things, to provide the employee with comprehensive advice on the costs and disadvantages associated with zillmerised contracts or such comparable agreements (cf. in particular the Annex to the VAG III. D.).
Otherwise, the sponsoring undertaking must be liable to its employees (even without fault on account of its duty of care). Pursuant to § 1 para. 1 sentence 3 BetrAVG is responsible for the fulfilment of the benefits promised by him in the pension agreement with the employee even if the implementation does not take place directly via him but, as in the specific case, via his provident fund (so-called subsidiary liability of the employer).
In addition, there are risks under criminal law (in particular, possible suspicion of embezzlement, §§ 266, 266a StGB, or instigation of or aiding and abetting such embezzlement by the provident fund) and, under certain circumstances, negative consequences under tax and social law for the employer due to the (partial) invalidity of the agreements.
The agent’s property damage insurer may deny coverage “for knowing breach of duty,” i.e., because the statutory requirement of equal value has not been observed and/or because a statutory prohibition regarding breach of trust, etc., has been ignored. However, this also applies to management’s D&O insurance with the employer or legal expenses insurance if the company takes personal recourse against the HR manager. Intermediaries are also personally liable with their private assets even if they were active through an intermediary limited liability company (Vermittlungs-GmbH): The reason for this can be, for example, the appearance as a “specialist” as well as the existence of a criminal offence. In addition, the VSH insurance cover for mediation could lapse because the advised employees themselves do not conclude any contracts – they only agree to the salary conversion and do not become policyholders, at best insured persons.
Standard of the Federal Supreme Court (BGH) Insurance intermediaries and occupational pension consultants rarely know. that they are subject to the same duties to inform and advise as the normal investment advisor according to the so-called BOND judgement. After that, the focus is on investor- and property-specific advice. The comprehensive information duties according to the bond judgement of the BGH of 06.07.1993, Az. VI ZR 12/93, compel consultation in individual cases, for example the consideration of the age of an employee, but also the important legal principle of equal value. All this was also the subject of dissertations, already many years ago !
Embarrassing questions to the U-Kasse In the balance sheets of the U-Kassen, the liability risks due to the lack of equal value are rarely adjusted. The duties of care of the board of directors or the management include in particular risk management (information and monitoring system) as well as proper bookkeeping and accounting in accordance with the U-Kassen statutes. This then regularly results in personal liability of the executive board or management of the U-Kasse vis-à-vis the employer as a member of the U-Kasse.
Any attempts to limit the liability of the U-Kasse from the outset to the assets allocated to the individual employer are unsuitable from the outset in view of these liability risks. However, since a U-Kasse often has no other assets at all and, in the case of congruent reinsurance, these assets are also allocated to the individual employees, a single such liability case can already cause the insolvency of the U-Kasse.
Employers are liable According to the BOND ruling of the Federal Court of Justice (BGH), this total loss risk and the employer’s default liability must be clarified. Many entrepreneurs have now noticed that the new head of their U-cash has become an insolvency administrator. Then the employers had to raise the money for the bAV a second time. Then the follow-up question arose with the employer as to whether there was any equity left?
*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 in Civil and Insurance Law (Univ. of Cooperative Education), Banker (fiala4instalive.instawp.xyz)
by courtesy of
www.experten.de (published on 09.02.2007)
