Hopes of bankruptcy-proof provision via a basic pension/ürup pension vanish into thin air

– How creditors can seize complete assets – even without surrender value -.


In 2015, the basic pension, also known as the Rürup pension, will be even more tax-deductible – up to €22,172 instead of the previous €20,000; for married couples, this amount will double. An employee of the German Insurance Association, who is described as an insurance expert, also points out that “the retirement capital of the basic pension is protected from third-party access during the savings period. That means: … possible creditors have no access to the basic pension.” However, this proves to be wrong in law.


Capital payment into an annuity insurance unseizable?

Let us assume that a married couple pays into a basic pension, either in instalments or via a single premium, up to more than EUR 1 million in order to finance an annuity starting in 15 years’ time at the age of 60 without a lump-sum payment, but without a death benefit. The monthly pension is then around EUR 5,000 per month.

A surrender value – which does exist – is not contractually paid out because the obligation to pay benefits is not certain – so the payout is limited to the death benefit with zero. As security for banks, such a contract is then worthless in the event of death, because in the event of death all payments end.

An attachment is now being levied on the spouses for claims of over EUR 1 million. Then there is initially no payout, because the insurer relies on the fact that contractually a benefit in the event of death as well as an ordinary termination are excluded and therefore no surrender value is paid out.


Advance garnishment of the pension payment always remains possible

Then, if the creditor is satisfied with the insurer’s information about the contractual arrangements, he can at least seize all future pension claims today and in advance.

This attachment is in any case to be recommended to the creditor even before insolvency proceedings of the spouses, because he thus secures access to the pension payments – even if insolvency proceedings were to be carried out in the meantime. This means that despite the discharge of residual debt of the spouses in the insolvency proceedings, the creditor could continue to enforce due to the sovereign attachment initiated by him at the enforcement court. The insurer’s pension payments will then at most not end up with the creditor during the insolvency proceedings. Very rarely, debtors will oppose an attachment, for example through legal remedies or insolvency proceedings at home or abroad.


Exemption limits for the attachment of basic or Rüruprenten?

All pensions paid out are then first deducted. There are exemption limits at most if other income does not reach the garnishment-free amount. This also applies to the basic pension.

Only – if it applies – a part of the pension from contracts that comply with § 851c ZPO can be secured by a seizure-free allowance. Usually this is not the planned 5,000 euros per month, but rather around to less than 600 euros per month. If no other old-age pensions are added, millionaire spouses become merely a case for the basic security pension.

Even if the assets were exempt from seizure in the savings phase, in case of doubt they will nevertheless serve mainly or completely to satisfy creditors due to seizure of the pension in the payout phase.


Exemption from attachment of the basic pension in the savings phase?

If it is argued that the basic pension is unseizable before the start of the pension because there is no entitlement to payment, but this entitlement can be seized in advance, this argument then proves to be as droll as claiming that the hourly wage is seizure-proof because it is not paid out every hour but only at the end of the month, or that the fall from the 40th floor is not dangerous because one falls past every floor without damage – only the impact at the end poses a problem.

It is downright nonsensical to refer to the unseizability of the capital in the basic pension, if later nevertheless (in many cases almost) all claims to pensions from it are seizable in advance. Using the term unseizability here is misleading.


Exemption from attachment of the Rürup pension in the savings phase?

The argument that if the surrender value cannot be paid out, there is no amount to garnish for payment proves to be a legally erroneous sham.

Of course, as a bogus expert, you can say that basic annuity contracts are “only funded and not lump-sum” because there is no cancellability before the annuity starts. But no matter whether these assets are immediately gone as attached capital, or only through immediate advance attachment of the benefit paid from it later – in both cases the value is then destroyed.


The marketing statement that the capital is seizure-proof in the savings phase remains misleading.

This is because everything that corresponds to the capital in terms of benefits will be attachable in advance.


Maximum damage after garnishment of the basic pension?

Garnishment-proof in the accumulation phase sounds as if there would actually be something left over in pensions in the event of garnishment.

If there were the relatively rare case that the basic pension was not only tax-optimised but also designed in terms of enforcement in accordance with § 851c ZPO, then in the end a few hundred euros more in pension benefits could emerge – despite garnishment.


And who then still thinks, with these cruelties the creditors would be patient nevertheless until the pension beginning and longer, is wrong enormously. Informed creditors, and also insolvency administrators, will simply refer to recent case law, argue that the debtor is in financial distress, and try to liquidate all assets by extraordinary termination of the basic pension. The hope of an arbitrarily high bankruptcy-proof Rüruprente proves to be drastically destroyed.


Normal attachable contract is better than “unattachable” basic pension in accumulation phase

If the creditor has only 500 TEUR to receive, a normally attachable capital-forming contract of 1 million would still leave 500 TEUR capital. Of this, a pension of EUR 2,500 could still be paid from age 60. In the case of the “seizure-protected” basic pension, on the other hand, no pension at all remains after the seizure. Only when the debts have been paid off after perhaps 18 – 20 years will the basic pension be paid again. However, only if the debtor still experiences this at the age of about 80.

And even worse: although the 5,000 EUR pension is transferred to the creditor by garnishment – it is still considered to have accrued to the debtor as a basic pension. After all, he has a real asset benefit from this pension payment – his debts decrease. However, this means that the basic pension is also taxable at a rate of up to 100% – which means around EUR 1,500 in taxes.

Should the debtor not be able to pay this from other income – insofar as the first creditor has not already seized it anyway – the tax office will be able to seize the basic pensions that have not yet been seized in order to hold itself harmless after repayment of the first debt after approx. 18 – 20 years from the basic pensions that continue to be paid from then on and to pay the accrued tax debt of approx. EUR 350,000 plus the tax on the first pension. to repay default costs therefrom. Then the debtor is unlikely to see even one euro of basic pension coming to him, but will end up with nothing but debts.


At most, there is a chance via § 851c ZPO – if exceptionally applicable – of a garnishment allowance at about the level of the poverty line, together with all other income.

This shows that the vaunted “seizure protection” of the basic pension in the savings phase in fact only entails glaring disadvantages. On closer inspection, the advertising for it proves to be misleading.


Compensation or reversal

Since many brokers and insurers have advertised the “seizure protection” of the basic pension in the savings phase without pointing out the disadvantages actually arising as a result, claims for damages against brokers may arise. However, because of the possible statute of limitations and the damage that will only occur in the future, declaratory actions should also be considered.


To this end, it is possible in many cases to contest and rescind basic pension contracts concluded under such misleading advertising by insurers. However, it will hardly be possible to achieve optimum reversal with surrender of all benefits drawn by the insurer without the assistance of actuarial experts.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


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About the author

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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