The entrepreneurial obligation to introduce a company pension scheme (bAV) in accordance with the Company Pensions Act since 01.01.2001
The legal invalidity of the commitments and the potential risk of criminal liability of the management in the event of the use of zillmerized tariffs
“Any cooperation is difficult as long as people are indifferent to the happiness of their fellow human beings.”
Galileo Galilei was cited before the Inquisition in 1632, after his heliocentric planetary system proved that the earth revolves around the sun and not vice versa.
What will happen to you as an entrepreneur if, after six years, you now find that your decisions on company pension schemes for your employees (employer’s obligation to convert remuneration into pension contributions under § 1a BetrAVG) may have been legally invalid since 1 January 2001?
In the worst case, you may be threatened with criminal proceedings for embezzlement and withholding of wages (§ 266 and 266a StGB). Preliminary proceedings have already been initiated against some companies
(e.g. Düsseldorf public prosecutor’s office, AZ: 90 Js 2833/06). A criminal record for the entrepreneur instead of thanks from the workforce for your company pension commitment?
At the very least, however, the legal invalidity of the promises made to your employees may lead to the situation “after the duty is before the duty”: You would then have to reprocess the entire complex of topics in your company. Where appropriate, undue taxes and social security contributions may have to be paid in arrears.
And your employees have a claim against you for reimbursement of the salary components that were used to finance the agent commissions from the pension plan contract. With 50 affected employees, liability sums of up to € 250,000.00 can quickly be reached. And this despite the fact that you were advised competently and service-oriented.
In addition, the financing product provider has advised you “free of charge”. Now the latter has “lost its costs”, because the Stuttgart Labour Court has already confirmed the employer’s liability for these costs. And Dr. Gerhard Reinecke (Chairman of the 2nd Senate at the Federal Labour Court) confirms this view in his article of 10 March 2006. (Source: “DER BETRIEB”, issue 10/2006, p. 555 ff.)
Now you will react with similar consternation as the church leaders who faced the problem of having to rewrite parts of the Scriptures if Galileo would not renounce his theory. After all, he did it to escape torture and the stake.
Since this is unlikely to be expected in 2006 from presiding federal labour judges, it is up to you: Make it clear to your company whether and to what extent you are affected by this problem or not and what solutions are available.
Since approx. 90% of all companies with so-called “zillmerised” tariffs (i.e. tariffs in which the agent commissions were charged to your employees’ contract credit balances at the beginning or in the first few years) have been advised by the insurance industry and its subsidiaries (pension, support and retirement funds) as well as their agents and independent insurance brokers, you should act before any of your employees or your works council does. Discussions on this topic are in full swing in the associations and the press.
And the insurance industry appeases after the motto: “What must not be, cannot be…”
Three steps will guide you through the competent restructuring of your company’s current pension concept “company pension scheme through deferred compensation”:
- Comprehensible preparation of the overall topic in consideration of the current legal opinions during the clarification phase in preliminary discussion with you and/or the responsible persons of your company after agreement on the type and scope of the presentation
- Recording of all data relevant to the assessment and documentation of the work carried out so far by the agent in coordination with all responsible levels in your company
- Legal evaluation and assessment of all information and documentation, in particular of disadvantages under labour law as well as of works agreements and, if available, of relevant collective bargaining provisions from the point of view of works constitution law with binding specification of liability by E.P.S.’s legal cooperation partners with separate mandate
- Actuarial evaluation of the resulting liability amounts, taking into account all individual commitments and their reinsurance financing, selected according to the implementation methods used and/or time value accounts and product providers by the actuaries and mathematicians cooperating with E.P.S. with separate mandates on the basis of achieving transparency regarding the cost and risk shares, other deductions and the extent of actual profit participation of existing policies when compared with policies of equal value
- Presentation of an overall final report and presentation of the further reorganisation concept, taking into account all liability problems and their legal and economic consequences
- Contacting the closing broker and/or product provider of the existing contracts with the aim of integrating them into the restructuring concept (in particular the possibility of transferring existing contracts into non-zillmerized or equal-value and thus for you liability-free reinsurance financing as well as out-of-court clarification of possible liability causalities)
- Implementation of a legally compliant (equal value) and actuarially transparent pension concept as well as its benefit-oriented administration with an appropriate software solution in your company with training measures for the employees concerned
- Preparation and execution of all discussions with the staff with preparation of all necessary minutes and labor law supplements, taking into account all information and welfare obligations on behalf of the management
- Advice for employees on the deferred compensation model now offered, with all the consequences under tax and social security law, as well as the personal benefit for their personal pension situation
- Preparation and implementation of the labour law supplements with the workforce for the legally secure release from liability through pro rata temporis compensation of lost wage components in the now existing deferred compensation model
- Monitoring of all administrative activities with the current product providers as well as ongoing controlling and coaching of your administration
- Legal clarification of the causalities under liability law as well as legal support in their extrajudicial and judicial enforcement
- Completion of the restructuring and release of the company
- Cost compensation through causal liability solutions
By Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
Published in E.P.S. GmbH, service unit Galileo (July/2006)
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About the author
PhD, MBA, MM
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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