Germany’s Employee Benefits News for March 2021
German employers have several news items to be aware of this month. The topics include the prevalence of company pensions in Germany, earning points for long-term contributors to the social pension, a draft amendment to the entitlement to a pension rights adjustment, occupational pension reports, and a decision around the transfer of undertaking following insolvency.
The Prevalence of Company Pensions in Germany – The Federal Ministry of Labour and Social Welfare has released the results of its “Employer and Carrier Survey on The Prevalence of Company Pensions 2019”.
According to the survey, presently 88% of companies with at least 20 employees offer a company pension, compared to 64% in 2001. For companies with at least 500 employees, it is now 100%, in contrast to 92% in 2001.
Additional Earning Points for Long-Term Contributors – §76g of the Fourth Book of the German Social Code came into effect on January 1, 2021, codifying the so-called “Grundrente” (basic pension).
According to this complicated regulation, pensioners who contributed to the state pension for at least 33 years are eligible for the basic pension if they contributed a maximum of 80% of the pension contributions of an average earner. If this is the case, the pension will be increased to a maximum of 80% of the average pension payment, after which, 12.5% will be deducted from the addition. In short, the increase amounts to a maximum of 12 earning points, currently about 420 EUR.
Legislative Draft Amendment to the Entitlement to a Pension Rights Adjustment – On November 25, 2020, the Federal Ministry of Justice and Consumer Protection concluded a draft on the entitlement to a pension rights adjustment Entwurf zur Änderung des Versorgungsausgleichsrechts, including but not limited to changes to §§ 14 and 19 of the Pension Rights Adjustment Act (VersAusglG).
In future cases of an external division in terms of §§ 14, 17 VersAusglG, an aggregation of the rights for the determination of the value threshold of the external division will now be performed if the party responsible for compensation has several entitlements with the same carrier.
Occupational Pension Reforms in Three Steps – Occupational pensions definitely took off in the last couple of years. The Law To Strengthen Occupational Pensions in 2018 (Betriebsrentenstärkungsgesetz) provided the long-awaited supplement required to give the employee’s benefits a significant push.
Recent decision: Transfer of Undertaking Following Insolvency – The applicant had been promised benefits in terms of a company pension scheme. According to the scheme regulations, the occupational pension was determined by the number of years of service and the remuneration on a set date prior to termination.
Insolvency proceedings were instituted against the employer’s assets on March 1, 2009. In April 2009, the business was transferred to the Respondent in terms of § 613a (1) of the German Civil Code.
This information is provided by Profion, Asinta’s employee benefits consulting Partner in Germany.