Prohibition of zillmerisation in the occupational pension scheme

The Munich attorney Dr. Johannes Fiala, banker as well as examined financial and investment advisor (A.F.A.), takes position to the judgement of the regional labor court Munich, fought for by its Kanzlei.
The new ruling of the Munich Regional Labour Court on deferred compensation does not really contain anything new in terms of content: it continues the case law of the “Stuttgart ruling” from 2005 and takes up the decision of the Constitutional Court from 2006 (“Zillmerung is unconstitutional because asset formation is being shortchanged”). Furthermore, it refers to the legal statements of Dr. Gerhard Reinecke (“Settlement of acquisition costs as an inappropriate disadvantage for employees”) and confirms the expert opinion of Prof. Hans-Peter Schwintowski (“Welfare obligation under labour law is incompatible with zillmerisation”). This reinforces the view that the violation of the principle of equal value legally leads to the invalidity of the deferred compensation agreement (between employer and employee). This nullity is then reflected in the contract between the employer and the occupational pension provider. The novelty of the judgment, in which expert knowledge that has been known for years has been incorporated through multiple arguments, is that the labour judges took great pains to convince the losing employer of the hopelessness of his legal position by including four legal grounds. The real “liability bomb” concerns the unnecessary damage to the image of the insurance industry. What’s more, some sales executives face the threat of losing all their assets – including their personal and company pensions – without coverage under a property damage insurance policy. Presumably, some affected intermediaries will not accept to pay for the damages alone and, as it were, as “pawns”. Liability for advice In accordance with § 31 of the German Securities Trading Act (WpHG) and the BGH Bond ruling, endowment life insurance policies must also be brokered in a manner that is “appropriate to the investor and the property”. How will a sued intermediary explain to the court that, according to the Federal Statistical Office, employees change employers every 4.9 years if, however, contracts with a term of 20 or even 40 years were brokered? Mediator issues: the choice between plague and cholera. It is regrettable for the intermediary to learn that no commission is due on void contracts. It is of little help to those affected to remember that experienced insurance brokers have for years offered occupational pension advice only for a fee. Many an intermediary can imagine that, for example, “his” U-Kasse could economically survive at most a single reversal. In a brutal way, the occupational pension intermediary gets to feel that the creditworthiness of the sponsor of occupational pension schemes is of existential importance not only for his customers but also for himself. The intermediary will need its own war chest because transaction costs will have to be pre-funded to enforce recourse against the product provider and other responsible parties. It is likely to be helpful for the intermediary to have an archive of training materials presenting “Zillmerung as consumer protection” and similar information. Intentional immoral damage, by the way, in occupational pension schemes the customers are not consumers but entrepreneurs with employer obligations. The decisive factor for the intermediary is that the courts have repeatedly sentenced authors of grossly incorrect training courses to pay damages due to “intentional immoral damage”: Here, no responsible party can hide behind a GmbH, Limited or AG – in the case of grossly incorrect instruction, private liability is imposed in accordance with § 826 BGB. There are many approaches to remediation on the intermediary side. One would be to stand in solidarity with your own customer. With the right strategy, the intermediary can try to take immediate action against those responsible in the second row and behind. But even in this case, the intermediary will be charged materially and/or immaterially. Perhaps it would do some corporate executives good to realize that it is not enough to say, “Risk is our business.” This also includes sustainability in the management of risks. For example, following the example of Munich Reinsurance Company: “We understand sustainable action holistically. This includes economic requirements as well as cultural, social and, of course, ecological aspects. In this sense, we want to create values, increase them and preserve them for the future”.
Contact: www.fiala.de
(PERFORMANCE 5/2007, 54)
Courtesy ofwww.performance-online.de.

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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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