Company pension scheme: U-Kassen without insolvency protection, up to 25 billion euros employer liability

The “Adkura Cash” case:

Once upon a time there was a U-Kasse in Ratingen, today you can only find the insolvency administrator on the Internet who handles this U-Kasse. The case went through the press, because the last official act of the owners of that U-Kasse was to transfer the U-Kasse assets to the Cayman Islands. The members of the U-Kasse, i.e. the employers, were not at all happy about this. The employer bears the so-called “Ausfallhaftung”, an extremely expensive occupational pension scheme fun.


No PSV protection in case of insolvency of the U-Kasse:

Neither in the event of insolvency of the U-Kasse, nor in the event of embezzlement by the administrators of such an association (a non-profit limited liability company or foundation is also conceivable) does the Pension Protection Association (PSVaG) intervene. This is simply a case of employer liability. For the financial intermediary or management consultant in matters of occupational pension schemes, a total loss risk that requires clarification. Here the recourse is with the mediators.


Invalid agreements with the employees:

The German Company Pensions Act (BetrAVG) stipulates that employees’ money must be invested “at the same value” in the company pension scheme. In principle, therefore, the wages saved for old age should not be burdened by unnecessary administrative costs. At the beginning of 2006, the trade journal of the expert association “aba” clearly stated: “U-Kassen cause additional “unnecessary” costs ” all those models in which employees are directly or indirectly charged with the administrative costs of the U-Kasse in the context of deferred compensation are (partially) ineffective. The lawyer also speaks of nullity here.


Nullity effect of lack of equal value:

Dr. Reinecke, the highest German labour judge in the matter of “retirement pensions” pp., put it in a nutshell at the Handelsblatt forum on company pension schemes at the beginning of 2006. This is because the invalidity of such agreements with employees has a knock-on effect on the contracts with the product providers or external providers of company pension schemes. Much to the delight of all contractual partners, this is then a matter of reversal. In practical terms, this means that the employer demands the return of all contributions paid and a normal capital market interest rate for these funds. Added to this are potential losses from additional tax and social security contributions.


Love letter to the U box office:

The typical letter to the U-Kasse then states that after §§ 134 BGB In conjunction with 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 U-Kasse administrative costs) and additionally due to the zillmerisation of the reinsurance in the U-Kasse (also a reason for nullity due to a violation of a legal prohibition of the BetrAVG!)

Some U-Kassen then state that there is no (!) zillmerisation, because the insurance conditions would say “At the beginning of the insurance contract high costs are incurred”. “The expert immediately recognises the competence of the author of such ineffective tranquillisers from the pen of a U-cash register, because this reference typically tends precisely in the direction of zillmerisation.


Shock at unions and mediators:

The mediator, trained at a “private academy” is horrified ” no he was never enlightened about this. He cannot call a comment on the company pension law his property. Also with the trade unions chaos prevails, because the so-called “metal pension” stands also in the fire ” were there not also commissions in the play, paid from the converted money of the coworkers ” And now everything is to be “zero and (partly) – nothingness” Yes, what value equality means, about it one did not know”.


Insolvency of the GmbH with U-Kassen-bAV solution:

The case is everyday ” annually about 20,000 GmbH’s go into insolvency. Take an entrepreneur from Hessen. The managing partner (GGF) and his 10 employees had decided on a U-Kasse. In the case of insolvency, the PSVaG will demand all the money from the U-Kasse, including the money for the GGF’s pension scheme. If you ask the PSVaG, this is not a “socialisation of the GGF pension assets”, but simply a legal transfer of claims. No, no, the money of the GGF for his provision is not gone ” it has just someone else.


It is the PSVaG’s accounting that matters:

The PSVaG will often find that the “reinsurance” of employees with the U-Kasse is to be described as “underfunded”. The identified financial deficits are then effectively compensated for with the retirement pension assets saved by the GGF. And if there is still some of the assets of the GGF left at the U-Kasse, then the fate of this money results from the statutes and benefit plan of the U-Kasse. Here too, it is easier for those who know how to read the details.


GGF care goes to Caritas:

Numerous U-Kassen statutes state that the “remaining” assets should go to a charitable organisation. What is often missing is a regulation that the (“few”) remaining assets from the U-Kassen coverage of the GGF should go to him as a so-called entitled person. The GGF is left with the proverbial view “through the stovepipe into the mountains” It is not surprising when the insurance sales manager of a large U-Kasse says that no insolvency administrator has ever received any money from him ” the money was never given to the GGF for his provision”.


GGF provision for the insolvency administrator:

And if it were otherwise, i.e. if the U-Kass statutes provided that the GGF could get at least a part of its pension scheme in the insolvency of its GmbH, then the insolvency administrator is already at the door, and holds out both hands. The insolvency administrator will usually assert claims from insolvency delay etc. ” and again the GGF looks “into the Bavarian alpine upland”.


Solutions via foreign countries:

Yes, abroad there is a different social policy, such as the “insolvency privilege” for life insurance policies (imposed by the local minister with a ban on advertising in Germany) or the unseizability of assets for pension purposes. A look at a united Europe shows that some entrepreneurs would not recover “from the German legal system”. With it some middle class enterprises shift then gladly a partial enterprise abroad ” while here in this country the unemployment rises: Achievement is to be worthwhile itself again ” Is the less becoming work distributed more fairly by work time extensions”?


Need for repair:

Repairing such “void” agreements of deferred compensation should not mean “driving out the devil with the Beelzebub”. The product providers and external providers of supplies are liable for billions. The presiding judge has made a clear prediction as to how the Federal Labour Court will decide. It is to be feared that U-Kasse in Ratingen will not remain the only U-Kasse insolvency case, if void contracts are rescinded at the insistence of the “cheated” employees. The deceived intermediaries are also responsible here for “who will ultimately bear whose insolvency risk”. In practice, it will boil down to the popular saying “first come, first served”.


by Dr. Johannes Fiala


published in AE Labour Law Decisions, AE 03/2006, pages 156-157


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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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