03.05.2007 The recently announced ruling on the zillmerisation of occupational pension tariffs (see link) is providing new fuel for the fire in the insurance industry. Brief background: In its ruling of 15 March 2007, the Regional Labour Court (LAG) in Munich decided that zillmerised tariffs are inadmissible in the context of employee-financed company pension schemes and that corresponding agreements on the conversion of remuneration are invalid. The LAG based its decision, on the one hand, on the requirement of equal value contained in the German Occupational Pensions Act (BetrAVG) (section 1 (2) no. 3 BetrAVG). The Zillmerisation in the case of deferred compensation also constitutes a violation of the prohibition of unreasonable disadvantage (section 307 BGB) as well as the basic idea of portability (section 4 BetrAVG). Moreover, in the opinion of legal experts, zillmerised tariffs in employee-financed occupational pension schemes are not in line with the principles of the recent case law of the Federal Court of Justice (BGH) and the Federal Constitutional Court (BVerfG), according to which the acquisition costs must be proportionate and must not frustrate the objective of asset formation. GDV comments on LAG ruling The German Insurance Association (GDV) has now issued a statement on the LAG ruling. In it, the insurance industry objects to the ruling, arguing that higher maturity benefits can be achieved with zillmerized tariffs and that, if the employee is sufficiently informed, a private-autonomous, voluntary (individual) agreement exists, so that sections 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. “Arguments of the GDV do not convince” “These arguments brought forward against the decision of the regional labor court Munich do not convince indes”, answers to it attorney Thomas Keppel of the residents of Munich Kanzlei Dr. Johannes Fiala. The statutory requirement of equal value could not be circumvented on the grounds of an allegedly higher maturity benefit in the case of zillmerised contracts, especially since this would not achieve the portability and thus flexibility required by the Occupational Pensions Act for employees who work for an employer for an average of just under five years. “Furthermore, even an express reference to Zillmerung does not result in a general business condition becoming an individual agreement,” Keppel continued. “The value equality requirement is precisely one of the special features of employment law which, under section 310(4), second sentence, of the Civil Code, must be taken into account in determining the validity of a general terms and conditions clause.” GDV disregards this in its comments on the decision. “The cases decided by the Federal Supreme Court concerned life insurance contracts without reference to (employee-financed) occupational pension schemes. The BGH had held that policyholders must be entitled to a certain minimum surrender value (just under half of the premiums paid) in the event of premature termination of the contract. The acquisition costs would have to be proportionate and the objective of capital accumulation should not be frustrated. “This jurisprudence was confirmed by the Federal Constitutional Court,” Keppel said. “A fortiori, the considerations underlying these decisions must apply where the employer converts pay due to the employee into a pension entitlement.” Within the framework of the contract concluded in this case by the employer with the product provider for the benefit of third parties, the choice of a zillmerised contract must therefore be avoided, as the objective of asset formation for old-age provision in the event of premature termination of the employment relationship would thereby become impossible, Keppel further explains and at the same time points out that the average duration of an employment relationship is not even five years. In view of case constellations such as the case decided by the Munich Higher Labor Court (premiums of EUR 6,230 paid in, after three years the surrender value of the reinsurance policy was only EUR 639), to speak of equal value on the basis of zillmerized tariffs, as GDV does in its statement, is therefore unconvincing and shows a lack of consideration of the reasons put forward by the Munich Higher Labor Court for the ineffectiveness of zillmerization in the case of deferred compensation. “Also from the fundamental admissibility of zillmer-similar – a Zillmerung in the narrower sense permits the insurance contract right straight no more – conclusion cost allocation methods after the VVG cannot be concluded the effectiveness of appropriate regulations in the context of the employee-financed BAV , so Keppel further. Here, too, the insurance industry overlooks the requirement of equal value as a “lex specialis” that takes precedence in employment law. “Contrary to the GDV’s view, it can therefore by no means be assumed that the Federal Labor Court, should it come to an appeal by the defendant employer, will amend the ruling of the LAG Munich,” Keppel is convinced. “Reasons to doubt this already result from the fact that the decision is based in essential points on the views of the presiding judge at the BAG, Dr. Gerhard Reinecke.” (hh)
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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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