According to Fondsprofessionell.de, the insurers’ association GDV has meanwhile commented on the Munich company pension ruling (cf. Finblog of 26.4.2007). According to the – not legally binding – ruling of the Munich Regional Labour Court (4 Sa 1152/06), the employer is liable if an employee suffers a loss due to “zillmerisation” in the case of deferred compensation. Zillmerisation means that the customer account is immediately debited with the acquisition costs for the entire term. Fondsprofessionell.de reports on the GDV statement as follows: The insurance industry objects to the ruling, with zillmerized tariffs one achieves higher maturity benefits and with sufficient information of the employee a privatautonome, voluntary (individual) agreement is present, so that also the paragraphs 307 ff. BGB would not apply. In addition, the BGH had stated in the decision referred to by the LAG that the Zillmer procedure did not in principle constitute an unreasonable disadvantage within the meaning of Section 307 of the German Civil Code. Furthermore, it had to be taken into account that the legislator itself assumed the admissibility of offsetting acquisition costs in the context of the forthcoming amendment of the VVG. What the Fiala law firm (represented the plaintiff employee) has to say about this is also in the report. What I find particularly astonishing is the GDV statement (if it was quoted correctly) that higher maturity benefits can be achieved with zillmerised tariffs. The opposite is usually the case, because of the negative consequences for compound interest. In the case of zillmerisation, there is no or only a small credit balance in the first few years of the contract term, on which interest is paid. The interest bearer is missing. This will be noticeable in the long run. The �lternative is to spread the acquisition costs evenly over the years of the contract term (as is usually done with investment funds). A little of each deposit is used for the acquisition costs. It builds up a credit balance faster that carries interest. And this interest then also bears interest again. Depending on the model assumptions (term, yield p.a., administrative costs, etc.), the Zillmer method may sometimes be ahead in terms of maturity performance. However, all models are open to attack, since in practice there is never a steady return of, say, 5% over 20 or 30 years. Especially since in this case it is not a matter of such arithmetic tricks: it is about the fact that employees change jobs much more frequently than in the past, and in some cases have to change jobs. Hardly anyone has the job for life anymore. If such a change then means a serious loss for the company pension, something is wrong with the company pension.
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PhD, MBA, MM
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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