by Johannes Fiala, Lawyer (Munich), M.B.A. (Univ.Wales), M.M. (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Banker (www.fiala.de )
The U-cash in the insolvency of the company:
For decades, the entrepreneur was told what some insurers still say today in their sales documents: “Your company pension scheme is protected against insolvency by a pledge of reinsurance”. The managing partner (GGF) believed in insolvency protection and that no insolvency administrator could take this money away from him. Unfortunately, this is a mistake, as practice shows.
The BGH ruling on reinsurance:
The Federal Court of Justice (BGH) has decided, using the example of the reinsurance of a pension commitment, that the insolvency administrator can collect and realise the reinsurance despite the fact that it is non-forfeitable and has been pledged (!) to the GGF (Ref. IX ZR 138/04). This does not affect normal employees who are also not de facto managing directors, because in the case of these the reinsurance policy of a U-Kasse is normally terminated and the existing assets withdrawn by the PSVaG.
The gap in the pledge model:
Under civil law, no lien matures before the retirement benefits become due. As long as this is the case, the pledgee (GGF) also has no right of recovery. Until then, the insolvency administrator can collect the reinsurance. Prior to the maturity of the pledge, the GGF has no right of valuation with regard to any reinsurance. The insolvency administrator shall retain and deposit the proceeds from the realisation of a reinsurance policy in the amount of the claim to be secured (cf. section 45 sentence 1 InsO). This deposit must be made until the claim to be insured from the pension entitlement becomes due or the condition lapses (§ 191 (1), § 198 InsO)?
More mass for the insolvency administrator:
If the condition fails, for example because the person to be provided for (GGF) dies and there are still assets in the reinsurance, then this money falls to the insolvency estate. The insolvency administrator and the mass creditors of the GmbH will be pleased about this. The insolvency administrator also has the possibility of offsetting against the GGF, in particular on the basis of claims of the insolvency estate. This could include, for example, loans from the company to the GGF, or claims for damages due to late filing for insolvency and numerous other conceivable breaches of duty. The insolvency administrator will always deduce from late processing of balance sheet statements or tax returns that the GGF has breached its duties.
No PSV protection for de facto GGF:
The de facto GGF, for example the wife with banking powers and other decision-making powers in financial management, can also be in the fire. The PSV protection is then of no use at all ? even if something else is repeatedly claimed at sales training courses: Because even if according to the BetrAVG the employee falls within the scope of the BetrAVG, the insolvency administrator can offset ! Then PSV doesn’t pay a penny. The claims against the PSVaG are governed by the General Insurance Conditions for Insolvency Insurance for Occupational Pensions (AIB). According to § 4 paragraph. 5 AIB, claims which the employer was entitled to deduct from the employee on the basis of an existing set-off situation are deducted in order to determine the entitlement to the pension benefit. The pension benefit of the PSVaG is reduced accordingly.
Gaps in occupational pension training:
Many financial service providers are surprised because this has been kept from you in your training as a ?certified financial planner? or as a ?bAV consultant? by one or the other (university) training company: There mostly only with water is cooked. A look into the expensive training documents shows whether with the different implementation ways the topic of the insolvency completion is represented. Also with the search for the main risks of the ?manager ?- liability, for example also after requirements on the part of the tax office and the health insurances personally against the GGF, find the inclined reader in the training documents to the bAV expert often as well as nothing.
Reorganization of pension commitment and U-cash models:
The reorganisation starts with identifying the target clientele. If the GGF is uncomfortable with the gaps in insolvency protection, the financial services provider has the option of completely reinsuring the reinsurance. The return is often a multiple compared to topping up the (still not insolvency-proof) reinsurance. The topic with the GGF is “Ways of insolvency protection restructuring in the bAV”.
Not to mention liability:
The consultant on the front line is always the first to be affected ? He must explain the gaps in the insolvency protection and preferably have this confirmed in writing. Why? Well, the GGF could later invoke the misadvice and then claim his retirement provision from the financial services provider; that is, if the insolvency administrator threw a wrench in the GGF’s (erroneously wrong) calculations with the lien protection.
Hanger for discussion with the customer:
The current occasion for the discussion is the new judgement of the Federal Court of Justice (BGH) of 07.04.2005: For who would come up with the idea of claiming that the alleged insolvency security of the pledging of reinsurance has always been legally on shaky ground? Albert Einstein once said, without referring to the insolvency protection advertising of many a German insurer:
A really good idea can be recognised by the fact that its realisation seemed impossible from the outset.
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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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