company retirement provisions

The company pension scheme

If the company pension does not deliver what you were promised

Every day we learn from politicians and the media that the statutory pension will at some point not be sufficient to maintain the accustomed standard of living in life after a professional career. Those of us who have taken out a company pension in addition to the statutory cover feel supposedly more secure because they receive additional provision in old age when they enter retirement. Often, however, we see with our clients, at the latest when the first payment arrives on the account, that the surprise or better the disappointment is big, if the company pension scheme turns out to be significantly lower than expected. This is often the case and it affects both employees who have concluded a conversion agreement with their employer and entrepreneurs themselves, especially from medium-sized companies who have concluded a bAV for their own pension provision.

At this point it should be noted that this is independent of which of the currently four possible variants of company pension schemes or five you have chosen or have been given by your employer. There are several causes for this imbalance between the pensioner’s expectations and the actual available pension, which are mainly to be found in the nature of the pension model itself. Furthermore, the occupational pension scheme does not only offer advantages for both employees and employers, as you can see below.

Overview of the five options for a company pension scheme:

  • Direct commitment
  • Support Fund
  • Pension Fund
  • Direct insurance
  • Pension funds

What is actually a company pension scheme?

The company pension scheme, also called company pension or, as it is more and more often called in advertising, remuneration optimisation, is in its state-subsidised form of remuneration conversion a tax shifting model for provision in old age. It allows employees and employers to use, as it were, the agreed, converted part of income excluding income tax and social security contributions for old-age provision. Up to this point, this sounds very promising for all parties involved, because the employee provides for his or her pension and at the same time saves on social security as well as taxes and the solidarity surcharge. The employer also saves, as mentioned social security contributions and, of course, the insurance companies also benefit, because they have another contract in their pocket for the next decades.

One might think that there is a happy end for everyone, but there are many decades between the conclusion of a company pension plan and the actual drawing of the pension. A large number of different problems arise for both employees and employers, which come to light in particular when the employee retires. Below we have listed the most common disadvantages/problems of the occupational pension scheme that repeatedly lead to uncertainty and dissatisfaction among those affected. We will also be happy to help you with the many-sided problems related to the topic of deferred compensation and occupational pension schemes.

The disadvantages of the occupational pension for employees:

  • lower retirement pension and reduced earning capacity pension
  • lower unemployment benefit
  • lower sickness benefit
  • Pension payments of the company pension are subject to income tax
  • Contributions are attributable to pension payments of the company pension to health and long-term care insurance
  • Sometimes enormous deviation from sample calculation and actual pension after deduction of all costs
  • The sale of the company abroad and the employer’s obligation to pay can lead to losses
  • insolvency risks: Employer insolvency, insolvency of consultants and brokers, insolvency of product providers (e.g. investment funds, life insurance companies, asset managers).

Our company pension scheme benefits for employees:

  • Checking your insurance documents with regard to a reversal of the company pension scheme
  • Enforcement of an increase in the bAV with the employer
  • Support during the audit with regard to the economic efficiency of an already completed occupational pension scheme
  • Examination of the legal possibilities with regard to the responsibility of the employer for repairs in the event of a loss of benefits by the pension provider
  • Litigation and judicial assertion
  • Optimisation of charges in the planning of old-age provision and pension schemes, including the design of severance payments
  • Enforcement of claims for damages against banks, insurance companies, together with (also freelance) consultants – including future damages

Stumbling blocks of the company pension for employers:

  • Obligation to pay compensation to employees in the event of a failure of the pension provider
  • Obligation to review the adjustment
  • trade sale
  • Consultant’s liability in the mediation of contracts
  • Regulation of company succession / advance succession, if any

Our company pension benefits for employers:

  • Accompaniment of expert actuarial expert opinion
  • Reorganisation and compensation of the occupational pension scheme as a tax-saving model
  • Advice on the obligation to review the adaptation
  • Advice on company acquisitions and risk analysis, including inheritance cases and company sales
  • Litigation and judicial assertion
  • Support in the formation of a foundation as an alternative to the classic occupational pension scheme for entrepreneurs
  • Legal and economic advice to employers regarding the choice of pension model
  • Cost optimization in case of imminent liquidity trap and/or pensioner GmbH, including restructuring
  • Design and examination of insolvency protection regarding gaps in protection, including trustee agreements, and so-called insurance shells of foreign insurers
  • Enforcement of claims for damages against banks, insurance companies, together with (also freelance) consultants – including future damages
  • Planning and control of models concerning time value accounts and partial retirement, as well as their compensation.

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