Through the Occupational Pensions Act, the legislator has imposed an additional task on employers “as disinterested investment managers” of their employees and also holds them liable for this. The authors explain what employers, but also consultants involved in the human resources area of companies, must observe from 2012 in order to comply with the legislator’s requirements without liability. Red.
A new ruling by the European Court of Justice (ECJ) also obliges employers in occupational pension schemes (bAV) to use only so-called unisex tariffs from 21 December 2012, for example when using direct insurance. Up to now, female employees have received a lower occupational pension than male employees for the same contribution, because men have a shorter life expectancy and therefore receive higher pensions in old age for the same contribution.
Liability based on back pension payments to women?
The ruling of the ECJ of 1 March 2011 (Case C-236/09) obliges employers or insurers to use unisex tariffs for occupational pensions, such as deferred compensation, from 21 December 2012. The General Equal Treatment Act (AGG) has been in force since 18 August 2006. The AGG is based on several directives of the European Union (2000/43/EC of 29 June 2000, 2000/78/EC of 27 November 2000, 2002/73/EC of 23 September 2002 and 2004/113/EC of 13 December 2004). The ECJ now declared an option not to use unisex tariffs in case of statistically proven differences between men and women in Art. 5 para. 2 of Directive 2004/113/EC, but with a transitional period until 21 December 2012.
Concerned – various forms of occupational pensions
Both defined-contribution direct insurance schemes, Pensionskassen and reinsured support funds fall within the scope of liability. Insofar as the directives stipulate the duty of equal treatment in a sufficiently concrete manner, employees can also rely on this for periods prior to 18 August 2008 after the expiry of a normal implementation period for the national legislator of approximately two years. The ECJ’s decision could well lead to female occupational pensioners suing for higher benefits. This concerns defined-contribution insurance tariffs, as almost without exception no unisex tariffs have been used for them so far.
Liability for overpromising to men
The implementation of the ECJ ruling means that anyone who has a deferred compensation policy today as a male employee or who takes out a new policy by 21 December 2012 with premium payments until retirement must reckon with the fact that he will not receive the pension already guaranteed in the insurance policy. This is if, at least for future premiums, only lower gender-independent pensions may be calculated. At this point, the widespread problem arises that employers promise their employees golden mountains for old age – but the insurance benefit does not fulfil this promise, which then leads to employer liability for shortfalls.
Legislator can interfere with existing contract guarantees
The legislator can regulate the implementation of the unisex tariffs in such a way that pensions for men which have already been bindingly and guaranteed by the insurer in contracts concluded earlier are also reduced in order to refinance the pensions for women which will be of the same amount in future. However, it is also possible that the legislator simply does not regulate anything at all and takes the view that the EC Directives have been sufficiently clarified following the ECJ decision and that, in the absence of a new EC Directive, there is no need for a new law. In the end, this could then simply become a new task for labour courts.
Parallel example health insurance
The problem of the levelling danger arises in the meantime also in the private health insurance: Women could change immediately into the unisex tariffs more favorable for them and enrich themselves there in relation to the men immediately in such a way that the premiums for new entrants would have to be calculated still more up to almost the women level and shoot up. In order to avoid this, the PKV lobbyists have turned to the state so that it may also legally prescribe the unisex tariffs for all already insured customers. The ECJ does not require such a far-reaching alignment at all, because it would leave the contracts already in place at the end of 2012 untouched.
Solution approach at the expense of the insured
The German legislator, however, could impose the unisex equalisation for all existing customers nationally beyond the ECJ requirements in order to help the industry out of its signalled predicament. The supervisory authority has already given the go-ahead for this, even if this unisex conversion alone means that additional increases of up to ten percent each will have to be implemented for existing contracts for men as of 1 January 2013, so that all women already insured at the end of 2012 can also be reduced to more favourable unisex premiums beyond the ECJ requirement. Conclusion: What seems possible in health insurance with the help of the legislator can just as easily be implemented in life insurance.
Liability risk for employers, advisors and intermediaries
While something similar is being seriously discussed as a solution in the occupational pension system, in the case of a corresponding private pension instead of an occupational pension the contracts with the gender-specific higher male pensions would remain in place – presumably: because the legislator could also regulate this differently, even retroactively. Because nothing is certain, it would be a “burden-sharing” law of equal treatment, so to speak, in which policyholders bear each other’s burdens, not insurers or employers. The private health insurance industry is showing how it is possible to intervene in existing contracts, commitments and “guarantees” with state help, if only they want to. Men who have taken out deferred compensation in the past or today and up to 2012 must reckon with disadvantages, or with losses due to zillmerisation in the event of early withdrawal.
Male employees threatened with disadvantages in the company pension scheme
Their old-age provision will possibly be less than they are currently promised, and also less than they are currently “guaranteed” in the insurance policy on a gender-specific basis. This is because the legislator can reduce these guarantees for equal treatment, in relation to future premium shares or completely. From the aforementioned, in turn, a liability of the intermediary and advisor can result, as well as of the employer, if they do not provide appropriate information. For them it can even become really expensive if, for example, they are liable for the fulfilment of the originally higher guaranteed men’s pensions or have to pay damages due to a lack of clarification.
Liability risk for advisors and intermediaries
This applies not only to new deferred compensation schemes but also to those already in operation because, for example, a termination still today often leads to lower losses than if premiums were to continue to be paid and the scheme terminated only a few years later. This is because, for many contracts, the acquisition costs are only charged in full over a period of five years, so that an earlier termination minimises the losses, whereas a failure by the employer to clarify the situation further increases the loss.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.kreditwesen.de (published in Vermögen &Steuern 01/2012, pages 16-27)
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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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