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Two pensioners on a bench
Photo: BARBARA SAX/ AFP
Current inflation is eating away at pensions.
Not only the statutory, but also company pensions are affected.
Seniors cannot maintain their accustomed standard of living if prices rise by eight percent, but pensions significantly less or not at all.
There are, of course, adjustment mechanisms.
The statutory pension follows the wage development, this year even with five or six percent.
And company pensions should actually increase automatically and regularly – at least with the inflation rate.
But they don't.
The labor court in Frankfurt has just ordered a major German bank to pay its former employee an appropriate increase in the company pension – 120 euros a month.
The bank had refused, among other things, with reference to the costs of the corona crisis (Az. 26 Ca 905/20).
Thousands of other pensioners may now be able to ask for more money.
However, the judgment is not yet final.
Company pensions must be increased regularly
The labor tribunal referred very nicely to the legal situation.
Employers who contractually owe their former employees a company pension must regularly check the amount and, if necessary, adjust it at their reasonable discretion (Section 16 BetrAVG ).
This test takes place every three years.
A pension adjustment is okay if it is no less than "the increase in the consumer price index" or the "net wages of comparable groups of workers in the company," says the law.
The aim is to maintain the purchasing power of the company pension.
The Federal Labor Court had already ruled in this way in 1985 (Az. 3 AZR 156/83).
Alternatively, the employer can undertake in advance to increase the pension by one percent each year.
If the employer has selected a direct insurance company or pension fund for the company pension, instead of using such an increase logic, they can simply use "all surplus shares attributable to the pension portfolio" for increases.
And it works like this: insurance companies and pension funds always expect their customers to get particularly old.
If they don't, the planned payments to the deceased are available as surpluses for the living customers.
However, if the ex-employer cannot prove that all surpluses
paid to clients, the inflation adjustment rule applies.
“The vast majority of current pensions” have to be checked and adjusted according to the three-year rules, Klaus Stiefermann, the managing director of the working group for company pension schemes (AbA), wrote to me this week.
exceptions
If the rules are so clear, why do arguments still arise from time to time?
We are in Germany: no rule without exception.
In the case of the increase that is actually due, companies may, at their reasonable discretion, pay less than planned or even pause completely if the employer's economic situation requires it.
In case of doubt, the company must then prove the need in court.
It's not easy.
Because there must be company-specific problems.
In any case, the simple reference to macroeconomic problems such as the corona crisis or the gas shortage was not enough to reduce or cancel the pension increase, according to Volkan Ulukaya, the lawyer for the former bank employee from Frankfurt.
Not increasing the pension should remain the absolute exception.
The Federal Labor Court had already ruled accordingly in 2014 when the ailing Commerzbank had refused to increase pensions for former employees with reference to its crisis.
At that time, Commerzbank was allowed to do that, but the state had just had to save the bank from bankruptcy (Az. 3 AZR 51/12).
The risk of inflation
In recent years, the rules for company pensions have been significantly improved from the employee's point of view.
If employees pay into the company pension themselves as salary conversion, the boss must add at least 15 percent.
The first 100 euros of the monthly company pension are no longer taken into account in the question of whether basic security is paid to seniors.
They are therefore a real additional income for poorer pensioners.
Health insurance contributions no longer have to be paid for the first 160 euros of company pension per month.
Health insurance contributions only apply for amounts in excess of this.
Company pensioners pay these alone.
Together with the increase rules, these reliefs actually form a decent package.
But what are the rules for increasing pensions in times of crisis really worth?
Current statistics show that more than 20 million German pensioners receive company pensions from eight to nine million contracts.
This is handled via direct commitments from employers, via provident funds, direct insurance companies, pension funds and pension funds.
I'll spare you the details here.
The challenge: If the majority of company pensioners get increases according to the inflation model, companies will face a lot in the coming years.
Three percent inflation in 2021, six to seven percent this year and another four to five percent in 2023. Then many company pensions would have to consider an increase of 15 percent in one fell swoop at the end of 2023 or the beginning of 2024.
For pension funds, which, according to statistics from the financial supervisory authority Bafin, pay out significantly more than four billion euros a year in pensions, this would mean additional costs of several hundred million euros.
evasive movements
It cannot be ruled out that some employers will then become inventive at the expense of their former employees.
A possible avoidance strategy that has already been practiced by many companies in the past: the pension of ex-employees is simply increased by half, in our example by eight percent.
And if the pensioner does not object to this insufficient increase within three months, even though she has been informed of the possibility of objecting in the small print, the insufficient increase is considered legally correct and the employer is fine.
At this point, lawyers speak of a debt to be collected by pensioners.
In retirement, you must therefore pay attention to pension increases every three years, read them carefully and, if in doubt, take action yourself.
A popular strategy is to miscalculate the company in the event of a contradiction and to claim that there is no money.
Here, too, the Federal Labor Court has ruled that excessive depreciation, i.e. losses that only exist in the books, are not an argument against a pension increase (Az. 3 AZR 172/02).
In the current case before the labor court in Frankfurt am Main, the judges ruled that the bank had not even tried to explain how it came to the alleged bad numbers.
The Federal Confederation of Employers' Associations did not want to comment this week on the question of how employers intend to deal with these challenges in the future against the background of rising inflation.
For company pensioners, on the other hand, the message of the law and the current judgment from Frankfurt is clear.
It pays to watch out and fight.
My advice:
Take care and read the mail from the pension company carefully.
The first adjustment check is due no later than three years after the start of the company pension.
If you have not received any mail, contact the relevant employer.
It's his duty.
If the regular adjustment mail comes from the company pension company, you should check whether the pension increase meets the statutory minimum requirements.
So how high has inflation been in recent years?
The figures are available from the Federal Statistical Office.
If the increase seems too low, be sure to appeal and ask for a detailed explanation of why the company's prospects are so poor that the legally required pension increase is not possible.
The company then has to prove it.
If the company still does not want to increase the company pension appropriately, you should hire a lawyer.
A good legal expenses insurance with employment legal protection pays.
