Since 2002, many employees have made use of the possibility of a company pension scheme by means of deferred compensation. What the lawmakers who initiated it ignored, however, is the cost. They are now becoming a dispute and are coming to the employers. What is to be done?
Since 2002, employees have often made use of the legal right to create an additional pension pillar for themselves within the framework of the company pension scheme (BAV) by means of deferred compensation. Not least the insurance companies with their selling agencies contributed in the substantial measure to the fact that the Entgeltumwandlung was established fast. Many employers, financial advisor Petra Neemann knows from own experience, have either consulted an insurance broker of their confidence if necessary or have left free hand to the coworker with the choice of the insurance products. Either way, the employer feels that he has fulfilled his obligation. Conclusion: In many companies, both employee-financed deferred compensation and company pension schemes with a wide variety of insurance providers exist side by side. In addition, most pension commitments are not properly documented and in commitments with risk components, such as an occupational disability pension, the tariff and contract components do not correspond to the standard texts of a model commitment that are usually used. Here considerable liability potentials for the employers slumber. Most people are not aware that BAV is first and foremost labour law! In addition the legislator, with the introduction of the requirement on Entgeltumwandlung did not make a definition, who carries the costs of the system. Now, some five years on, the question of costs is coming up, with the result that a court ruling has placed the onus on employers. (cf. box) Employers in the liability trap Here, according to Munich lawyer Dr. Johannes Fiala, the “experience with financial sales” could be expensive for employers, because in addition to “value compensation”, social security contributions are incurred, which cannot be charged retroactively to the employee after three months. The employer saw 20 per cent tax advantage with the operational precaution – over the risk to pay 120 per cent and more in the end on balance it had not been advised. The new decision of the Munich Regional Labor Court concerns every implementation method of the company pension scheme (direct insurance, pension commitment, pension fund, pension fund, reinsured support fund). If the sum of the contributions paid in is not approximately available at all times, the employer is liable for default in the case of deferred compensation. Employees can, at the latest when they leave the company, sue the employer for payment of a missing difference in value. However, the term “difference in value” is undefined, i.e. not defined by the legislator. In this respect, it remains open how courts will interpret this in the future. What can be done? Experts agree that every employer would be well advised to have its occupational pension schemes independently reviewed in order to uncover and correct latent liability risks. Crucial: It is essential to consult a truly independent financial advisor or expert! According to Neemann, each pension scheme should be considered individually, as there are no standardised solutions. In addition, it is certainly advisable to discuss the issue with the tax advisor in the context of the annual financial statement. Fiala adds: “In the case of deferred compensation, the employer has the role of a ‘disinterested trustee’ (OLG Düsseldorf, ruling of 6 March 1992), i.e. the duty to choose a favourable offer in the interest of the employees. The growing employer liability over time may suggest a balance sheet adjustment.” Petra Neemann hopes that the current discussion will give momentum to the occupational pension market and make it more transparent. Because in her view, the BAV is an essential component of wage policy and, from this point of view, is used far too little as a design element and set up accordingly in a professional manner. Nor can she imagine the Munich ruling being upheld so easily. Because this would be absolutely counterproductive with regard to the intention of the legislator to establish the BAV as an essential element in people’s retirement planning. So it remains exciting. To the annual conference of the general association of the German fuel and mineral oil trade (gdbm) on 28 September in Dresden Petra Neemann will report to this topic and give further current information. enfalle Betriebliche Altersvorsorge:
(Source: BRENNSTOFFSPIEGEL and mineralölrundschau 06/2007, p. 44)
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About the author
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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