{"id":22373,"date":"2022-05-29T13:29:10","date_gmt":"2022-05-29T11:29:10","guid":{"rendered":"https:\/\/fiala.de\/pension-commitment-and-insolvency\/"},"modified":"2023-03-30T18:28:20","modified_gmt":"2023-03-30T16:28:20","slug":"pension-commitment-and-insolvency","status":"publish","type":"post","link":"https:\/\/www.fiala.de\/en\/pension-commitment-and-insolvency\/","title":{"rendered":"Pension commitment and insolvency"},"content":{"rendered":"\t\t
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Insolvency application risk for pension commitments<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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The so-called pension<\/strong> commitment <\/strong>or direct commitment<\/strong> is a common and extremely popular pension provision concept for managing directors<\/strong>, especially in medium-sized companies. Thousands of times thought of as a retirement provision for<\/strong> leading employees, this “tax savings model”<\/strong> was gladly recommended by tax consultants<\/strong> all over Germany and advertised to companies<\/strong>. <\/span><\/p>\n

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

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

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

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

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

Launched <\/span>as a supposedly unbeatable <\/span>tax-saving model<\/strong> in which there were only supposed to be winners, it actually led <\/span>both to <\/span>old-age poverty among pension beneficiaries <\/strong>and toinsolvent companies that <\/span> can no longer meet<\/span>their <\/span>pension obligations<\/strong>. <\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Weaknesses in pension commitments to the detriment of managing directors<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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