{"id":30535,"date":"2021-11-16T13:28:36","date_gmt":"2021-11-16T12:28:36","guid":{"rendered":"https:\/\/www.fiala.de\/?p=30535"},"modified":"2026-06-22T21:43:13","modified_gmt":"2026-06-22T19:43:13","slug":"employer-liability-risks-occupational-pension-bav-job-change","status":"publish","type":"post","link":"https:\/\/www.fiala.de\/en\/employer-liability-risks-occupational-pension-bav-job-change\/","title":{"rendered":"Employer Liability Risks in Occupational Pensions (bAV) When an Employee Changes Jobs"},"content":{"rendered":"

– Pension capital transfer or change of policyholder – a choice between plague and cholera –<\/h2>\n

In purely statistical terms, an employee’s length of service is just under five years. Where the employee holds an occupational pension entitlement, he or she can in principle take it to the new employer – but only if the former and the new employer both agree, § 4 BetrAVG (German Company Pensions Act)<\/a>.<\/p>\n

Transfer of the pension capital<\/strong><\/h3>\n

Transferring the pension capital is the classic route: in addition to the new employment contract, the new employer issues a fresh occupational pension commitment. Under the so-called portability agreement, the transfer value of a direct insurance policy, a Pensionsfonds or a Pensionskasse may be moved across. Section 4 BetrAVG also applies to the transfer value of a pension commitment and of a support fund (Unterstützungskasse). The employee would be entitled to deferred compensation.<\/p>\n

In many cases employees only realise on termination of the occupational pension insurance that it was already a loss-making proposition, because frequently less than half of the contributions paid in is actually transferred. Later, when pensions or lump sums are paid out, there is often an additional tax burden, including the common obligation to pay contributions to the statutory health insurance. Until payment falls due, entitlements to sick pay, the statutory pension and unemployment benefit have also been reduced. Anyone who does the maths often finds it would have been cheaper to have the money paid out via payroll and to invest it personally.<\/p>\n

Locking in further losses through new insurance tariffs<\/strong><\/h3>\n

In many cases the new employer will only be able to conclude insurance contracts with a lower guaranteed minimum interest rate, combined with fresh acquisition costs. Lower interest rates mean lower guaranteed benefits for the employee, but also lower liability exposure for the employer. From the employee’s perspective even a new direct insurance policy is a foreseeable loss, because the investment return is simply eaten up by administrative costs and inflation. Not every employer is willing to structure the contracts so that, for example, provision is made for surviving dependants and for occupational disability. The insurance tariffs are particularly disadvantageous for male employees insured since 23 December 2012, because since then so-called unisex tariffs have given them benefits that are up to more than 20% lower. The employer could avoid this – not least by choosing an insurer that is not domiciled within political Europe.<\/p>\n

Unisex is not mandatory in the occupational pension system<\/strong><\/h3>\n

In occupational pension schemes the unisex tariffs, which are unfavourable for men, are not mandatory. Employers can therefore find providers who continue to offer gender-based rates. Even where unisex calculation is required, it is only required at the level of an individual employer or, for instance, a group of employers. Large employers with a disproportionate number of men can thus secure more favourable unisex rates for their workforce as a collective than the ordinary individual policyholder. Alternatively, it may be worthwhile for the employer to take advantage of a collective offer from a group of employers whose industry has a higher proportion of men in its workforce. Employers who make the search for suitable offers too easy for themselves can quickly find themselves exposed to liability through unfavourable arrangements.<\/p>\n

Change of policyholder as an alternative?<\/strong><\/h3>\n

On a change of policyholder, the new employer steps into the insurance contract concluded by the former employer. The new employer often does not suspect that it thereby assumes responsibility for the choice of the occupational pension provider (tariff, insurer, support fund, pension fund, etc.) and that any shortfall in value equivalence carries over. As a rule the previous commitments, simplified as they are, are then also taken over by the new employer – including any additional legal drafting errors and liability risks. If the former occupational pension commitment already failed to be equal in value, the transfer value will often remain so even on a change of policyholder. Some insurers support the change of employer of a bAV commitment with collections of forms which, of course, are not automatically liability-proof and do not relieve the employer of its legal obligations.<\/p>\n

No release from liability for the former or the new employer<\/strong><\/h3>\n

No employer can be certain that a commitment will ever be equal in value as the law requires, whether measured by deferred pay or by transfer value. The law promises the employer no release from liability. The employee’s claims against the former and the new employer regularly become time-barred only after up to 30 years, calculated from the commencement of the pension. There is no statutory type of commitment under the Company Pensions Act that releases the employer from its responsibility. The legislator could have left it to employees – as with capital-forming benefits – for the employer with the least responsibility merely to make payments into a savings contract. With occupational pensions arranged via life insurance, almost all employers fail to mention that around half a dozen mechanisms exist to reduce insurance benefits, even retroactively, to well below the guaranteed level. Where Pensionskassen or Pensionsfonds later cut their benefits in accordance with their articles of association, the employer will be liable for the differences too – likewise where the commitment was not equal in value from the outset, or becomes so at the latest upon an early premium waiver or reduction. A total loss has already occurred in the case of a support fund whose capital was embezzled, and of an industry pension fund whose assets were irretrievably moved to a tax haven by hackers. The employer is liable – even where it appears to be blameless.<\/p>\n

Alternatives without insurance cover and without offsetting in old age<\/strong><\/h3>\n

The questionable return from the employee’s perspective, and the employer liability that piles up over time, both argue for looking at alternatives. For employees the best solution may simply be to optimise the present tax burden and to have the entire occupational pension benefit paid out today. For employers, the alternative is that statutory liability under the German Company Pensions Act should be avoided like the devil avoids holy water. With off-the-peg, insurance-based solutions this can hardly succeed. With offers of employee capital participation for asset formation, or with pension arrangements organised through foundations outside the occupational pension system, however, it will be possible to minimise the liability-bearing demand for deferred compensation.<\/p>\n

The mass of employees face the best prospects of old-age poverty and of a means-tested basic security pension that must be applied for afresh every year – and this applies to higher income brackets too, which have hardly any chance of maintaining their accustomed standard of living in old age. At the same time, many people’s present decision to forego consumption through Riester saving will lead to no improvement whatsoever in their later level of provision. According to statements by the federal government, however, provision is in any event deemed adequate so long as no social assistance has to be claimed in old age. Some employers have already recognised that it can therefore make sense, as a matter of welfare, to organise a supplementary pension scheme for employees in such situations on a charitable basis, for example through a foundation. The advantage for the employer may be tax-related; for employees, the advantage lies in more flexible benefits. In this way, loyalty to the company up to the start of the pension can also be rewarded far better through vesting rules that depart from the German Company Pensions Act, achieving a stronger retention effect than the usual occupational pension solutions – particularly as there is a conflict of objectives here with the better employee mobility called for at EU level, which will soon be reflected in vesting periods shortened to three years.<\/p>\n

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm<\/p>\n","protected":false},"excerpt":{"rendered":"

Transferring pension capital or changing the policyholder \u2013 a choice between plague and cholera. When an employee moves to a new employer, the occupational pension (bAV) can come along too \u2013 but both employers remain exposed to long-running liability for value equivalence.<\/p>\n","protected":false},"author":3,"featured_media":30532,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","rank_math_focus_keyword":"","rank_math_description":"","rank_math_title":""},"categories":[28],"tags":[506,812,504],"class_list":["post-30535","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-bav-en","tag-liability","tag-pension"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/30535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/comments?post=30535"}],"version-history":[{"count":1,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/30535\/revisions"}],"predecessor-version":[{"id":30686,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/posts\/30535\/revisions\/30686"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/media\/30532"}],"wp:attachment":[{"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/media?parent=30535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/categories?post=30535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fiala.de\/en\/wp-json\/wp\/v2\/tags?post=30535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}