As of January 31, 2023, transposition into national law (draft bill of April 20, 2022) is to make it easier for domestic companies to merge with foreign (European) companies, including transfer of the registered office abroad. In return, company pensioners can then be deprived of the protection of the German #Pensionssicherungs #Vereins aG (PSVAG) in the event of insolvency.
The fairy tale of the legal right to collateral for pension beneficiaries as “creditors
An association of insurance salesmen announced in this connection that possible security could be “actively demanded” in particular from affected pension claimants if the employer moves abroad as a result of a merger. However, this misconception is based on the incorrect understanding that vested rights to benefits falling due in the future are not yet fully-fledged claims – the lawyer considers them to be “aged” because they will only fall due at some point in the future.
Only when the insured event occurs do pension claims regularly become receivables due in installments, for which, however, no security could be demanded in advance by law. Contractually, it is often a design gap, or an unrecognized option. In addition, there is only the case of insolvency of the employer, because then the “aged” claims are also legally deemed to be due, § 41 Insolvency Code (InsO).
Only after maturity, creditors could already demand security even in the case of national conversion, Section 314 of the German Conversion Act (Umwandlungsgesetz – UmwG) – and, moreover, in the future, in the case of cross-border conversion, be able to prevent the entry of the merger in the register of companies until security is provided, so that the register court should not issue a certificate of merger until then. However, if the company pensioner receives the pension payment to which he is entitled only upon survival, he cannot demand security for this either – he would first have to survive for the future pension payments.
Danger of design abuse due to EU company conversion
According to its press release dated June 8, 2022, the PSVaG also sees a risk of abuse due to the EU Conversion Directive. In particular, claimants to future pension benefits can hardly demand additional collateral under the current and future envisaged legal situation. The PSVaG is of the opinion that the national implementation of the EU Conversion Directive can lead to “abuse and difficult legal proceedings in another European state to the detriment of the pension beneficiaries”. However, this is the fate of every creditor when his debtor absconds abroad.
A lawsuit for failure to pay occupational pension benefits abroad, possibly in a foreign language and in a foreign jurisdiction, promises considerable additional expense for affected employees.
Collateral for pension beneficiaries is not only important from conversion onwards
As a rule, employees do not even realize that they themselves have worked for the assets accumulated through company pension schemes. If there is then only a fraction of the necessary or promised assets with the employer or pension provider for the acquired entitlements, they may have voluntarily given up their rights and their protection by sufficient collateral for years. If the employer becomes insolvent, employees can usually tell that they have not been paying attention because the PSVaG has to step in – and then the actual pension is already reduced. However, the PSVaG is not responsible for foreign company bankruptcies at all.
Negotiating advantage for employees in the case of legally valid collateral
Another question is how high collateral would have to be for a company pension. For example, if such collateral is available from a maturing reinsurance policy and the employer wishes to release the lien (successively, if necessary). Then the employee needs an expert opinion on the amount of collateral still required, with the frequent result that the employer would first have to earn and pay the company pension itself for, say, 10 years before it could begin to successively release the collateral from the life insurer. And this with the usual high level of reinsurance.
From then on, such employees regularly light candles and pray for the employer’s survival – because the de facto loan collateral (e.g. reinsurance) in the occupational pension scheme then covers at best a fraction of what is needed for the future pension, or only for pensions after age 70 or 80.
Not only a company merger abroad, but also the maturity of a reinsurance policy, as well as the outsourcing of the occupational pension by the employer, offer themselves as an occasion to raise the question of the amount of occupational pension loan collateral as an employee.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.guetsel.de (published in July 2022 under the heading: Company pensioners lose claim to German employer after simplified transfer of domicile).
www.channelpartner.de (published 08/07/2022 under the headline: Company pensions at risk)
www.experten.de (published on 12.07.2022 in ExpertenReport under the headline: Company pensioners lose claim to German employer)
www.versicherungsjournal.de (published 07/15/2022 under the headline: Company pensioners lose claim to German employer).
www.versicherungsbote.de (published 07/15/2022 under the headline: Company pensioners lose claim to the deuten employer).
www.adeba.de (published 07/22/2022 under the headline: Company pensioners lose claim to German employer after simplified transfer of registered office)
Link: Betriebsrentner Verlieren Anspruch An Deutschen Arbeitgeber Nach Vereinfachter Sitzverlegung ⋆ Adeba
bank intern (published in bank intern Spezial zu Beilage 40/2022 of 04.10.2022)
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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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