Expert team

Company Retirement/
Pension Plans

Company retirement/pension plans (betriebliche Altersversorgung, bAV) are not only one of the three pillars supporting retirement schemes in Germany, they also form an important, indispensable building block for the recruitment and long-term retention of qualified personnel in particular. Our bAV expert team provides you with employment law advice and counsel that is comprehensive, competent and focuses on the business-related economic aspects of the introduction, adjustment and implementation as well as the discontinuation of company pension schemes.

Complex Topic

In Germany, company retirement/pension plans are fundamentally governed by the Company Pensions Act (Betriebsrentengesetz, BetrAVG). However, pension commitments have various legal sources and can originate from collective agreements, works agreements, individual or collective contractual commitments.
In addition to the national regulations of the BetrAVG, European legislators’ provisions are increasingly coming into effect in the form of directives and regulations. This is why, more and more frequently, existing pension schemes must be adjusted to comply with changed national or additional European framework requirements and specifications. It is also crucial to be up to date when introducing a new pension scheme for the first time. In particular, it should be noted that several transitional regulations declare that many provisions are only applicable for certain time periods.
In view of this, the applicable statutory regulations to be considered must be analyzed comprehensively. We would be happy to support you in untangling this web of regulations and formulating a future-proof pension scheme that is ideal for your purposes.

Formulating the pension scheme of your choice with legal certainty

Determining an appropriate form of commitment and a suitable implementation method is vital. The BetrAVG stipulates different commitment forms and implementation methods in various combinations, each offering advantages and disadvantages that must be considered on a case-by-case basis. Choosing the right scheme depends to a great extent on the individual needs and objectives of a business. For example, the commitment form “purely defined contribution” (reine Beitragszusage), newly introduced in 2017, allows for the employer to be largely released from liability. As a result, significantly higher pensions can be achieved, but a specific pension benefit is not guaranteed.
We will refer you to a group of extremely experienced consulting firms who will advise you on the financial and tax-related aspects of selecting a pension scheme and method. Together with a consulting firm, we will implement the bAV scheme of your choice as a company policy with legal certainty.

Minimizing liability risks

In accordance with Section 1 (1), Sentence 3 BetrAVG, the employer must always vouch for the fulfillment of the obligations to which it has committed itself, which also includes cases involving external pension funds. Therefore, company retirement/pension plans also entail a liability risk from the employer’s perspective that should not be underestimated. Minimizing this legal liability risk for your business is our key concern when selecting the appropriate bAV products.

Economically sustainable solutions in a continuing low yield environment

Some older pension regulations stipulate high interest rates which, due to the current historically low interest rates, are virtually impossible to achieve on the capital markets. The question of how old pension schemes can be discontinued or shut down with legal certainty and replaced by modern schemes is accordingly growing in importance for businesses.
We will support you in safely discontinuing older schemes and replacing them with your preferred new financing concept.

Adjusting ongoing company pensions and dormant pension rights

BetrAVG requires the adjustment of ongoing company pensions and, since 2018, also the cost-of-living adjustment of dormant bAV pension rights for employees who retired prematurely. This may become an increasing financial burden for businesses. This is particularly significant in terms of financing, as this adjustment applies to company pensioners and prematurely retired employees with pension rights, i.e. persons who no longer contribute to the success of a business.

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However, any occurring financial burdens are limited in various ways. Company pensions need not be adjusted if the economic position of the business does not allow for it. The dormant pension rights of prematurely retired employees can be adjusted by about 1 percent p.a. This manner of dealing with dormant pension rights requires little administration effort and is easy to forecast. Our team of experts will advise you on the adjustment of ongoing company pensions with legal certainty or the cost-of-living adjustment of dormant pension rights. In this context, we focus on preventing potential legal disputes before they arise.

Our experts,
your contacts

The members of our expert team have many years of experience in advising large and medium-sized businesses on all labor-law matters related to company retirement/pension plans. In addition to their practical expertise, our experts’ many and varied publications in the area of company retirement/pension plans also prove that our advice is first-class in terms of jurisprudence.

Dr. Tim
Wißmann, LL.M.

Dr. Severin

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