Salaried freelancers must be regularly registered with the statutory pension insurance scheme

Judgment of the Federal Social Court in Kassel

The Federal Social Court (judgements of 03.04.2014, Ref. B 5 RE 13/14 R, B 5 RE 9/14 R and B 5 RE 3/14 R) has ruled that dependent in-house lawyers are not entitled to exemption from statutory pension insurance pursuant to Section 6 I SGB VI. The syndic is already prohibited from giving legal advice to the business partners of his employer, § 46 BRAO. When exercising the first profession, i.e. as a lawyer, there must be no overlap with legal matters from any second profession, e.g. as an in-house lawyer (Syndikus), Section 45 BRAO. According to this dual-occupation theory, each occupational activity is to be assessed independently for the purposes of compulsory insurance. An in-house lawyer, per se, is simply not a lawyer at all. And any other employee may also provide unrestricted legal advice to his or her employer.

The German Pension Insurance Association (DRV) has already announced that “an independent exemption procedure must be carried out for every new employment or self-employment subject to compulsory insurance taken up after 31 October 2012”. An honest design recommendation would be to pray three more rosaries before sending out requests for deliverance, and to include only what is necessary in the requests. No senior physician has to inform his new subordinates that 50% of his time is spent on filing and translating his reports.

Office of Legal Counsel only pro forma

However, an exemption from compulsory insurance with the DRV is still possible if a lawyer, tax consultant or doctor is employed by a colleague “independently and without instructions”. For decades, newcomers to the profession were advised to apply for admission to the professional chamber simply in order to become a compulsory member of the professional pension scheme. As a law firm, it is estimated that one in four legal assistants can be reached via a mobile phone and a doorbell, even without stating their profession. The pension chamber was recommended as a more profitable funded pension scheme. Only a few chamber professionals have nevertheless paid voluntary contributions to the DRV, for example to spread the risk. Many even believe that the pension from the pension fund will still be able to secure the standard of living in the future.

Capital cover or pay-as-you-go system

In the case of individual pension chambers, there were reports of investment losses due to the financial crisis or pension payments also from the capital stock. Currently, the compulsory member of a lawyers’ and tax consultants’ pension scheme is suing because the Riester subsidy for compulsory members of professional pension chambers was not also introduced in the course of the 2000/2001 pension reform (Federal Fiscal Court, Case No. X R 11/13). The fact that Riester allowances are statistically regularly skimmed off again as taxes in the pension phase, and that the expected net return is thus at best around zero percent in real terms, also because of the low interest rate level on the capital markets, has apparently not yet got around. This after the slogan “tell the German he could receive 1 euro tax promotion by allowances – and erschenkt you smoothly 2 euro and more”.

Reporting obligation for employers

Employers must now also register employed freelancers with the DRV and, if necessary, submit an application for determination of status. Employed legal advisers, tax advisers and doctors could also wait, because for wage accounting periods which lie longer than three months back, the employer is regularly liable alone – an option to improve the own old age pension without personal savings contribution still something afterwards. Also many commercially self-employed persons do not realise until they are dismissed that they were actually only pseudo-self-employed.

There are different regulations in the statutes of the approximately 90 pension funds, so that in many cases not only lower contributions are possible on application. Sometimes, exemption from contributions may also exist or be achieved, in particular on the basis of applications for compulsory insurance submitted within the prescribed period, for example also to the DRV.

Self-employed persons must register with the pension insurance themselves

Self-employed persons who are similar to employees are personally obliged to register with the DRV, including the payment of their own contributions. However, many self-employed people are not even aware of their statutory pension insurance obligation.

For example, a self-employed midwife recently complained that she could not receive any Riester allowances because she was not insured under the statutory pension scheme. The good news for her was that she was entitled to the Riester subsidy because it was not a question of membership of the pension insurance scheme, but only of compulsory insurance in the statutory pension insurance scheme. And this exists because all self-employed midwives are required by law to pay pension insurance. The bad news was that she would therefore also have to pay back the pension contributions she had previously evaded.

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

by courtesy of
(Der BauUnternehmer, July 2014 edition)

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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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