Pension commitment and insolvency

The so-called pension commitment or direct commitment is a common and extremely popular pension provision concept for managing directors, especially in medium-sized companies. Thousands of times thought of as a retirement provision for leading employees, this “tax savings model” was gladly recommended by tax consultants all over Germany and advertised to companies.

A pension commitment or direct commitment is a form of bof occupational pension provision in which a company provides for its employees Invests money from company funds. As the name already suggests, the company says here either a fixed amount for the annuity or a guaranteed interest of the invested money. There is usually no additional payment by the employee.

This pension model is very popular because it provides enormous tax advantages for the company. The so-called
Pension provision
, i.e. the money that
for
set aside for the employees, can be treated as a business expense. can be claimed for tax purposes. An apparent win-win situation in which companies save taxes while gaining attractiveness among employees . Employees thus receive an additional pension without making any financial contribution of their own. In the first moment, the treasury “comes away empty-handed”.

In fact, make Problems with this model only noticeable later. As is so often the case with insurance policies and commitments, the true vulnerabilities only reveal themselves when the promised benefits become due or the respective company is company is sold or handed over to a successor should be. In addition, the amount saved has practically tripled in recent years since the introduction of the euro, with the same pension payout. Here it becomes statistically clear that the Insolvency risk for companies and, as a consequence, many managing directors are often left without a pension.

There are several factors responsible for this, which make this pension concept
a discontinued model in the
German Pension world makes. On the one hand, often no or only Insufficiently performing reinsurance concepts in the companies in order to maintain appropriate capital in the long term. On the other hand, in some cases no Reinsurance policies which would have cushioned any capital bottlenecks. Deteriorates If the economic situation of thecompanies subject to pension obligations then deteriorates or a sale becomes unavoidable, the damage has already been done.

In Germany, it can be assumed that more than 90% of managing directors received a pension commitment as part of their contractual agreements, which were, however, not covered by financial resources. Gloomy outlook for companies and CEOs.

Launched as a supposedly unbeatable tax-saving model in which there were only supposed to be winners, it actually led both to old-age poverty among pension beneficiaries and toinsolvent companies that can no longer meettheir pension obligations.