An obligation for the business, an argument in the market
Employees in Germany have a statutory right to convert parts of their pay into a company pension. Where that saves the employer social security contributions, the employer has to pass on a subsidy of 15 percent of the converted amount. This rule now applies to new and to older agreements alike.
That makes the company pension scheme no longer a voluntary extra but part of your people management. Anyone who shapes it actively and explains it well can use it in the competition for skilled staff. Anyone who merely administers it has the work anyway.
The five ways of running a scheme
German law offers a choice of five vehicles: the direct insurance, the pension fund known as Pensionskasse, the Pensionsfonds, the relief fund known as Unterstützungskasse, and the direct promise made by the employer. They differ in their effect on the balance sheet, in their tax treatment, in administration and in how flexibly promises can be adjusted later. For the workforce, a simple route that can be explained well is usually the right one; for managing directors and senior staff other models come into consideration.
The provision arrangements of company owners and executives can rarely be separated from what happens in the business anyway. Retirement, survivors' and occupational disability provision therefore belong looked at as a whole. When setting up relief funds and on all questions affecting the balance sheet we work closely with your tax adviser, which for us goes without saying.
Existing pension schemes should be reviewed regularly
In many of the company schemes we have reviewed, contracts and agreements with employees had not been adapted to the changed legal framework for years. Promises from old employment contracts, unclear rules on adjustment or scheme rules that no longer match the actual membership only come to light when an employee retires or the company is due to be sold.
That is not an academic problem, because the employer stands behind the benefit promised even where the chosen provider pays less. We take stock of your scheme, sort the promises, review the scheme rules and the documentation and show you where things have to be put right.
When did you last review your pension scheme?
We take stock, sort the promises and tell you where something needs to be done.