Annuity

An annuity is under German law a recurring payment ( pension ), which to a certain event - usually until death is paid - the recipient of the pension ( §§ 759 ff. BGB ).

In the case of the annuity, a distinction must be made between the basic contract under the law of obligations, from which the obligation to order the annuity consists, the order of the basic right and the individual pension payments, which one has to imagine as the fruits of the basic right.

Collateral

The annuity can be secured in rem through a real burden on a property ( §§ 1105 f. BGB). A notarized or authenticated submission of the debtor in a foreclosure is possible as security ( § 795 para. 1 no. 5 ZPO ). Value hedges against the risk of inflation are possible through contractual clauses, provided they comply with the price clause law .

Real estate annuity

The real estate annuity enables (older) owners to convert the value of their property into a lifelong supplementary pension. The recipients of the real estate annuity get a notarized land registry secured lifelong right of abode . This gives you the certainty that you can stay in your familiar surroundings.

use cases

House sale for an annuity

One use case for the annuity is buying a house. If an annuity is agreed, the purchase price is not paid in full, but only partially (or not at all). The buyer undertakes to pay the seller part of the purchase price immediately and the rest as a monthly annuity until the seller's death. These pensions are taxed in accordance with Section 22 of the Income Tax Act i. V. m. 55 EStDV with the term-dependent income share .

The advantage for the seller is that he can secure part of his income for the rest of his life. The buyer hopes that the seller will die unexpectedly early and that the annuity will end prematurely. In such a case, one speaks of an actuarial gain. If there is no adjustment to the inflation rate , the buyer can also hope that his income will increase, but the value of the annuity will decrease due to inflation.

House handover against annuity

Another example is the protection of home owners through annuity payments for their children.

Annuity legacy

In the pension legacy z. B. the child of the inheriting father is burdened as the sole heir with an annuity in favor of the widow.

Insurance solution

Life annuities can also be agreed as time annuities with an indefinite term. The contract ends with death as a loss of risk . Variants of the annuity are the deferred annuity , the temporary annuity and the immediate annuity (immediately - annually starting on the 1st of each month). They are other income within the meaning of § 22 and § 23 EStG.

calculation

In order to calculate the value of an annuity, the situation can be represented mathematically as follows:

The debtor (buyer of the house) has assets that, through interest payments , deliver exactly the amount that he has to transfer to the creditor (recipient of the annuity, seller) in each period (monthly, annually).

{\ displaystyle \ mathrm {pension} = \ mathrm {capital} \ cdot (q-1)}

Capital is the part of the purchase price that is not to be paid immediately, but as an annuity. The formula assumes a constant interest rate on the capital market and the worst case scenario for the buyer, who assumes an eternal life of the creditor (recipient of the annuity, seller). Seen in this way, this is the cheapest value for the buyer without the seller being taken advantage of, i.e. the arithmetical lower limit for the amount of the annuity.

If the average life expectancy of the seller is known based on statistical data, this formula can also be used (applies to payment at the end of the payment period, i.e. in arrears):

{\ displaystyle \ mathrm {pension} = \ mathrm {capital} \ cdot \ left ({\ frac {q-1} {1 - {\ frac {1} {q ^ {n}}}}} \ right)}

Where n is the number of interest periods (usually months) that the seller will statistically still live. The formula results in the most favorable value for the seller without the buyer being taken advantage of, so it is the arithmetical upper limit for the amount of the annuity.

{\ displaystyle q = {\ frac {p \, \%} {100 \, \%}} + 1}

p is the interest rate for the return on capital and must be adjusted to the period of q. If, however, one assumes (as is usual in many transactions) a monthly payment and interest rate p, which reflects annual interest, then instead of q, q _m is correctly used:

{\ displaystyle q_ {m} = \ left ({\ frac {p \, \%} {100 \, \%}} + 1 \ right) ^ {\ frac {1} {12}}}

The amount of the annuity can also be influenced via the interest rate p, which cannot be predicted for the future but has to be assumed.

history

In the Middle Ages and the early modern period , the life annuity was a way for Christians to circumvent the church's ban on interest . In this case, the creditor provided the debtor with an amount of money and received an annuity in return.

Swiss law

The life annuity is regulated in Switzerland in the Code of Obligations , Art. 516 ff. Details are regulated by the Debt Enforcement and Bankruptcy Act (SchKG).

The life annuity can be acquired through regular contribution payments or as a single premium with the aim of a later access to the pension (deferred annuity) or by paying a single premium with the aim of immediate access - usually one month in arrears - access (immediately starting annuity). If an annuity is settled by a one-off payment, the actuarial present value of the annuity is usually paid out as the settlement amount. The basic right of an annuity under Swiss law cannot be attached (Art. 92 Para. 1 Z. 7 DEBA). This fact justifies the equality of the acquisition of an annuity against payment by the debtor with a donation within the framework of the debt enforcement and bankruptcy law Pauliana (Art. 286 para. 2 Z. 2 SchKG).

literature

Alfred Krätzschmar: Old-age security and taxation: a model-based analysis for life annuities , Heidelberg: Physica-Verlag, 1995, ISBN 3-7908-0889-X .
Ivica Dus, Raimond Maurer: Financing retirement - life annuities and, or withdrawal plans: the design of the payout phase in funded pension schemes , Cologne: Dt. Inst. For old age provision, 2007, ISBN 978-3-934446-32-8 .
Julius von Staudinger (greeting), Jan Eickelberg , Norbert Engel, Jörg Mayer , Maximilian von Proff zu Irnich (editing): J. von Staudinger's comment on the civil code: Staudinger BGB. Book 2, Law of Obligations. Sections 741-764: (community, annuity, game) . Sellier-de Gruyter, Berlin 2015, ISBN 978-3-8059-1186-3 .

Web links

Insurance cash values for life annuities 2016/2018. (PDF) Tables for the annual and monthly advance payment. Federal Statistical Office, November 5, 2019, accessed on December 15, 2019 (German, volume: 1588 pages).
Retirement of a capital, "annuity calculator"
Online annuity calculator with life tables for Germany or Austria

Individual evidence

↑ Dirk Looschelders: Law of Obligations. Special part. 8th edition. Vahlen Verlag, Munich 2013, ISBN 978-3-8006-4543-5 , p. 335 f.
↑ Pension legacy on erbrecht-heute.de.
↑ Wolfgang Grundmann, Bernd Luderer: Collection of formulas for financial mathematics, actuarial mathematics, securities analysis .
^ Albert Wild: Life annuities, life insurance and pension institutions .
↑ BGE 130 III 235, 237; Hunziker / Pellascio, p. 308.

[1] Dirk Looschelders: Law of Obligations. Special part. 8th edition. Vahlen Verlag, Munich 2013, ISBN 978-3-8006-4543-5 , p. 335 f.

[2] Pension legacy on erbrecht-heute.de.

[3] Wolfgang Grundmann, Bernd Luderer: Collection of formulas for financial mathematics, actuarial mathematics, securities analysis .

[4] Albert Wild: Life annuities, life insurance and pension institutions .

[5] BGE 130 III 235, 237; Hunziker / Pellascio, p. 308.