Occupational pension provision: The imperative of equal value – void occupational pension provision?

bAV-Handelsblatt Forum:

Invalidity of deferred compensation

Dr.Reinecke, chairman of the pension senate at the Federal Labour Court (BAG), has dropped the bomb. Its core statement is that contracts for the implementation of occupational pension schemes can be (partially) null and void. Insurance intermediaries are surprised – have they been brokering ineffective contracts for years?

The Federal Labor Court is merciful and just?

The chairman is merciful because he announces how he will decide – against employers and thus also against intermediaries. Many intermediaries ignore the message – after all, everyone needs something to live on (habitually via commission). Banks are also involved in this cartel of commission orientation. The problem that deferred compensation could be null and void, and with it legally linked contracts with insurers for reinsurance or outsourcing, has long been known. But the sales advertising of the product providers has often put this aside. The mediators will be the first to take the blame, before the employers of course.

bAV fee consulting:

And now it comes in detail. Acquisition costs (commissions) and excessive administrative costs, as well as “zillmerisation”, could violate the principle of equal value. The Betriebsrentengesetz (BetrAVG) regulates this, and not just since yesterday. Advertising by product providers has only recently begun to take a closer look at this legal requirement. And already the advertising machinery is up and running – it’s not all that bad, after all – the justice system has been dealing with for quite some time. Because Dr.Reinecke is by no means the only labour judge who comments on equal value.

The risk of criminal liability:

Let’s think about this objectively. There is the realization that the employee can demand a company pension scheme. He is entitled to it because the legislator has so stipulated. This entails costs and liability for the employer – as a matter of course for the entire area of payroll accounting. In terms of levies, occupational pension schemes are currently mostly advantageous. In this legal game, the employer is a trustee of the assets/wage of his employees, because he determines “the implementation path and the tariff”. The view in §§ 266, 266a StGB is horrible – infidelity threatens (the employer, and the intermediary from the point of view of incitement and aiding and abetting). Dr.Reinecke didn’t say a word about it. But connoisseurs of the matter know what and to whom the hour might have struck.

Arrogance of an insurance executive?

Then a real estate agent reports “Nothing to worry about; yesterday I talked to the board of the Pfefferminzia, and they will call the chancellery to have it repaired. The liability lawsuits against intermediaries show that employers do not understand when they feel deceived. Some agents are familiar with the situation when they are sued and their product provider “lets them fall cold”.

Lack of advice:

There are omissions on the part of the legislator, especially when “undefined legal terms” are in the law. Here the judge may then create new law. This includes “equality of value”. Such a thing is a risk for all parties involved – in this case the employer and the financial advisor, up to and including criminal liability, and in this case the threat of a rescission weighs almost far less. Who has ever informed the employer that it is completely unclear whether an insurance company is allowed to “zillmerize” or otherwise charge any administrative costs and commissions. Here, too, clarification has been the order of the day for years (BGH ruling of 20.10.2005), including for the intermediary. But which intermediary has already received information from his product provider on equal value? In the end (again?) one or the other intermediary is condemned and leaves the market?


Tax consultant liability:

The tax advisor is no better off than the agent. A tax advisor recently had to realize through the aforementioned BGH ruling that the uncertainties of the interpretation of an undefined legal concept, such as equality of value, must be clarified. This is nothing new, but in which sales training course was this covered? For the agent, but also for the tax consultant, it is questionable whether the VSH insurer is liable in such cases. Because if (like here?) legal prohibitions are possibly violated, no VSH insurer will pay. Ask your VSH broker, because a violation of the requirement of “equal value” is usually uninsurable. The tax consultants have another problem: How is an (unrecognized?) ineffective salary conversion treated in the payroll accounting? The broker is almost always on board?!

Deception by product suppliers?

An association has now put it on its website, the Bundsverband der Selbständigen (BVD): Here it is made clear that entrepreneurs can lose their entire company pension scheme in insolvency according to the “pledge models of the insurance industry”. Only this finding does not lead to the goal for the mediator. Also in this point, there is a considerable need for renovation to repair unfortunate designs, of course paid for.

Rethinking sales:

For the broker today, it is a matter of recognising that fee-based consulting has a promising future. Agents are still trying to earn their money with commissions in occupational pension consulting. The risk of civil and criminal liability is high. Regarding risks and side effects, ask your legal adviser – but (don’t) ask your broker adviser?


Employer liability as a door opener:

There is apparently a massive need for restructuring within BAV because of the infringement of equal value. The reason under labour law is the breach of the duty of care, because the employee’s claim against the employer under labour law is usually higher than the claim against the insurer involved under insurance law. A discussion with trade unions or works councils, perhaps even a gentle reference to the objective criminal offences of §§ 266, 266 a StGB, can help to open up this market. Or you might ask how the tax advisor has managed to treat (partially) ineffective deferred compensation for tax purposes for years? Even if some insurers have so far unsuccessfully tried to refute Dr.Reinecke – his statements reveal an existential need for advice as a sales opportunity.



by Dr. Johannes Fiala

by courtesy of

www.experten.de (Published on 08.05.2006)

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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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