pays contributions to the statutory pension insurance scheme and yet is not a compulsory member
Attorney at Law Dr. Johannes Fiala
Last year more than 2,000,000 Riester contracts were sold. Due to the changeover to “unisex tariffs” (equal premiums and equal benefits for men and women), male customers had to sell out at the end of the year. In this context, customers were generally not properly advised even when concluding contracts via call centres. This is because the mandatory prerequisite for the Riester subsidy is compulsory pension insurance in the statutory pension insurance scheme. And this is usually not the case with family members, even if they have been paying pension insurance contributions for years. Especially for wives with low incomes and many children, the allowance can be more than 90 percent, so that the pension gap created by the legislator can be closed. However, there are also disadvantages, such as the limited inheritability, the conditional lendability, and the prohibition to move away from Germany in old age (so-called Mallorca clause). One in five citizens is thinking of escaping old-age poverty by living abroad, which is often cheaper. It is considered just as antisocial when one’s own statutory health insurance company simply “deregisters” the German citizen when he moves abroad in old age. Only those who are compulsory members of the statutory pension insurance scheme receive a Riester supplementary allowance. However, this is not the case for over 1,000,000 assisting spouses. Experts estimate that five per cent of all employment relationships are “worthy of review”. This is because numerous German citizens pay compulsory contributions to the statutory pension insurance scheme, but are in fact not compulsory members at all!
Family punishment: lack of social security check?
Only when the benefit case occurs, as is the case with unemployment insurance, do the authorities check. Family members who are not subject to compulsory insurance do not receive unemployment benefit. In the case of the Riester contract, there is also no de facto check – employment in the family business can later lead to the finding that the Riester allowances were granted “wrongly” – they are claimed back by the state. “Marriage and family are under the special protection of the state order” is stated in Article 6 of the Basic Law. Then the citizen should also be able to expect that his so-called social security status is checked ex officio. After all, protection against unemployment or poverty in old age concerns existential risks. Hardly any tax consultant is aware of the fact that the status under social security law must be checked regularly. Few insurance agents know that status can change from year to year. The insurance broker Hermann Siebenhaar, Neutraubling knows the problem: “When brokering Riester contracts, the safest way must be taken. Therefore, a status determination procedure is always necessary.” The applications for the Riester subsidy/permanent allowance even point out that false statements are punishable by law. But company audits do not create legal certainty in this respect. The lack of ex officio review may also unnecessarily criminalise affected families. With approximately five million Riester contracts, who is to carry out the necessary annual review? The permanent allowance application is certainly not particularly helpful. If the Riester contract was brokered on the false premise of an alleged subsidy, the citizen can regularly claim damages from the broker as well as the insurance company. According to the legal regulation, the family member concerned bears the cost risk of the reversal. Numerous family members have already experienced that an employment office refused the benefits of insolvency and unemployment benefits: On (further) application there were then only the contributions of the last four years refunded – the rest one could sue perhaps with the tax adviser as liability case, because usually the remainder was barred by the statute of limitations. Insurance intermediaries are also liable in the case of Riester brokerage, but for a maximum of ten years, after which the statute of limitations expires: If the status check takes place later, the cooperating family member will probably be left sitting on a loss – the claim for repayment of the state allowance subsidy, which is not subject to the statute of limitations. The question remains whether this legal regulation has a “system”, the pension damage is pre-programmed, so to speak, and what this has to do with the protection of “marriage and family”.
Attorney Dr. Johannes Fiala, Munich
(The Construction Entrepreneur April 2007)
Courtesy of www.der-bau-unternehmer.de.