Optimization of pension equalization – even during a current marriage

In the case of direct commitments and support funds, external splitting in accordance with VersAusglG is an option. A transfer to the Deutsche Rentenversicherung is more profitable than a new capital cover. A commitment to the company pension scheme (bAV) increasingly contains a higher pension promise than is paid out.

 

With regard to pension equalisation, there is currently (still) the possibility of “externally dividing” a company pension scheme (bAV), for example in the event of divorce, Section 17 of the German Pension Equalisation Act (VersAusglG). Pension commitments and support funds are affected. The beneficiary spouse then receives a claim in the amount of the settlement value from the same, and at the choice of the institution from another pension institution, § 15 VersAusglG. A capital amount is payable, Section 14 VersAusglG. This can only be used to finance lower pensions (at current conditions).

 

The German Association of Actuaries calculates in advance

A calculation example from the German Association of Actuaries (DAV) (cf. Statement on the public hearing in the Legal Affairs Committee of the German Bundestag on 25 March 2015 on the draft bill to amend the Pension Equalisation Act of 17 March 2015, available at https://aktuar.de/politik-und-presse/positionen-und-stellungnahmen/Stellungnahmen/2015-03-17_IVS-Stellungnahme.pdf) shows that a transfer to a funded provider can lead to a monthly pension that is more than 30% lower in individual cases than a transfer to the German Pension Insurance Association (DRV). The DRV pension – even if paid in voluntarily – is therefore more favourable than any new capital cover. Higher pensions are offered by private BGB-Leibrenten from a wide range of providers. However, divorcees are often not aware of the option of subsequent recalculation, Section 33 of the VersAusglG.

In the calculation example of the DAV, the capital relevant for the external transfer claim is based on § 253 (2) of the German Commercial Code (HGB) with a discount rate of 4.43%. However, this interest rate will fall sharply, to below 4% by the end of 2015, to below 3% by the end of 2016 and to below 2% later. However, this means that the capital for the transfer claim of the external division increases sharply.

Due to an amendment to the law (Act on the Implementation of the Residential Real Estate Loan Directive and on the Amendment of Commercial Law Regulations of 11 March 2016, Federal Law Gazette 2106, 396 et seq.

 

Typical calculation errors of the employer

Up to now, only few company pensioners have been aware of the employer’s obligation to pay a premium in the increasingly frequent case that the employer’s occupational pension commitment includes a higher pension than is actually paid. Some employers use the much lower taxable pension provision to calculate the compensation capital. In accordance with the valuation principles of commercial law, the dynamic adjustment of pensions is also to be taken into account to an increasing extent, § 16 BetrAVG.

It is not uncommon for a part of the pension to be simply forgotten, for example if certain groups were promised a supplementary pension or if a pension fund existed in addition to the direct commitment. There are also frequent attempts to pass on an initially high wage tax burden to the person entitled to compensation when a paid-out direct insurance policy is split up.

 

Subsequent divorce = higher pension capital

Candidates for divorce could wait until the discount rate according to § 253 II HGB – as average interest rates over the last ten years – has fallen further. To date, only a few employers have systematically used the early settlement of current pensions and occupational pension entitlements (§ 3 BetrAVG) to improve their ratings. Alternatively, a reversal of the transaction by challenging the occupational pension scheme is conceivable. The obligor could completely withdraw private pension insurance policies from the pension equalisation scheme by exercising a lump-sum option, but compensation is nevertheless owed for this arrangement (BGH, NJW 2015, 1599), which can also be agreed through compensation payments. Since 2015, compensation payments to avoid a current or future equalisation of pensions have been tax-deductible like special expenses, §§ 10 Ia No. 3 and 22 No. 1a EStG. In return they are taxable at the recipient’s place of business.

 

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

by courtesy of

 

www.njw.de (Neue Juristische Wochenschrift, NJW-aktuell 28/2016)

 

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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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