Direct confirmation
A direct commitment (also: pension commitment ) is a company’s obligation under labor law to pay the employee or his or her surviving dependents one-time or ongoing benefits (old-age pension, occupational disability, death) after termination of the employment relationship under certain conditions. For this purpose, the employer gives his employee a promise of benefits. The direct commitment is a way of implementing company pension schemes .
Nature of the direct commitment
In the case of a direct commitment, the employer has to provide the company pension benefits himself. In contrast to the company pension models of direct insurance , pension funds or pension funds , he does not use any external implementation channels, so he is himself a pension provider and is therefore obliged to pay the promised company pension to the employee who has left the company . In this respect, this implementation method is an internal company legal relationship.
From the employer's point of view, the direct commitment offers the advantage of flexibly structuring the transfers according to your own ideas and possibilities. Since there is no need to pay a contribution to an external pension institution, the funds can be kept or invested in the company, which increases the company's scope for action within its liquidity framework. The income from investments, for example, can be freely used. Funds are accumulated and the direct commitment is financed internally within the framework of commercial and tax law provisions through the formation of pension provisions in accordance with Section 249 of the German Commercial Code , Section 6a of the Income Tax Act . In order to be able to finance pension or lump-sum payments , as well as life- long pension situations , with minimized risk, employers often take out external reinsurance (certain form of life insurance ) with an insurance company .
Since vested entitlements are subject to insolvency protection, the employer has to pay contribution contributions to the pension insurance association (PSVaG) in the scope of the pension obligations.
Legal validity of a direct commitment
Direct commitments can originate in a special "individual contractual agreement" (here a written agreement is strongly recommended for reasons of evidence), a "pension scheme" (regularly: notification in a suitable form, such as a notice board ), a works agreement or a collective agreement . Operational practice can also be the decisive factor for legally binding ( principle of equal treatment ).
The range of benefits offered by the direct commitment includes benefits for old-age pensions , disability pensions , widows / widowers 'pensions and orphans' pensions . Instead of pensions, lump-sum benefits can also be promised.
Types of commitment
The direct commitment can be pronounced as a “benefit commitment” or as a “defined contribution commitment”. Benefit commitments are agreed as “fixed commitments”, “salary and / or length of service-related commitments” or “total pension commitments”. In the case of defined contribution commitments, the employer undertakes to pay certain contributions towards the pension entitlements. With the latter form of commitment, the amount of the pension benefits depends on the insurance premiums paid.
Trade and tax balance
As of the balance sheet date , a commercial and tax balance sheet is prepared. The trade balance is used to query the creditworthiness of a company. The purpose of the tax balance sheet is to be taxed on the basis of actual performance.
Tax / qualifying phase
With society
In the balance sheet, the direct commitment is financed through tax pension provisions ( § 6a EStG, § 249 HGB). These are liabilities whose amount and / or due date are uncertain. Pension provisions reduce company profits and are allocated to outside capital in the balance sheet. With the annual additions, the pension provisions are built up in installments and can be claimed for tax purposes. The disclosure of pension provisions is mandatory under both commercial and tax law (so-called passivation obligation according to Section 6a EStG). Conditions for the passivation are that a written fixed legal right insists on the direct commitment and includes these no reservations.
Insofar as direct commitments were made before January 1, 1987, the company has the right to choose the balance sheet approach (Art. 28 (1) EGHGB). The total of the unrecognized old commitments is to be stated in the notes.
Advantages: On the one hand, they reduce profits, which lowers the company's tax burden. At the same time, the company's liquidity is increased and can be used for internal financing. To hedge against a possible burden on liquidity through so-called balance sheet risks , it is possible to take out (congruent) reinsurance. Since the German Accounting Law Modernization Act was applied, reinsurance policies have been offset against the provisions for pensions and similar obligations and reported under liabilities.
With the employee
Expenses for a direct commitment remain completely tax-free for the employee. This applies to both employer and employee-financed pension expenses. In addition, there is no social insurance exemption up to 4% of the assessment ceiling in the pension insurance (BBG / DRV). In this phase there are no other tax effects for the employee, in particular no tax liability.
The direct commitment is possible through salary conversion . However , there is no entitlement to “Riester subsidies” in the direct commitment to deferred compensation. A commitment under labor law in the form of the “contribution commitment with minimum benefit” (see Section 16 (3) No. 3 BetrAVG ) is also not provided for by law in the context of the direct commitment . However, the level of benefits is already determined on a regular basis, which is why the employee's provision can be calculated.
Tax / pension payment phase
With society
Pension provisions are to be set up or held during the reference period. The taxable partial value in this period is the actuarial present value of the future pension benefits. Since this present value decreases every year (except possibly in the years in which the pensions are adjusted), there are then releases of provisions that increase profits and thus increase the company's tax burden. In this phase the liquidity is reduced.
If the insured event provides for the payment of capital (severance payment instead of company pension), both the pension provisions and the asset value are released immediately.
With the employee
From the occurrence of the insured event, current benefits are to be taxed according to § 19 EStG as subsequent income from employment after deduction of the pension exemption and the employee lump sum. The so-called fifth rule applies to lump - sum payments .
If the employee is covered by statutory health insurance , the benefits from the direct commitment are covered by the health insurance of pensioners (KVdR). Contributions to long-term care insurance are also charged.
Bankruptcy protection
Once the employee a pension benefit has been granted under the Company Pensions Act falls, direct commitments have on the pension security fund will be hedged against insolvency of the employer. For example, the managing director of a GmbH or the board of an AG (i.e. the top management of corporations ) are not subject to the Company Pension Act . In the absence of applicability of the Company Pension Act, the obligations are not secured by the pension insurance association. The insolvency protection of the pension assets can, however, be achieved with an existing reinsurance policy by pledging the same to the beneficiaries and their surviving dependents.
In addition, in the event of the employer's insolvency, the Pension Insurance Association takes the place of the employer and assumes the employer’s performance obligation ( Section 14 (1) BetrAVG). The employer has to pay the contributions to the pension insurance association.
literature
- Peter A. Doetsch, Arne E. Lenz: Pension commitments to shareholders, managing directors and board members: tax recognition - insolvency protection - design - sample texts . [Preferred title: Tax treatment of pension commitments to (shareholder) managing directors of a GmbH ]. VVW GmbH, Karlsruhe [2017]. ISBN 978-3-899-52958-6 .
- Sebastian Uckermann: Company pension commitments to managing partners: Tax and civil law requirements, design options, financing channels . Schäffer-Poeschel, Stuttgart 2019. ISBN 978-3-791-04372-2 .
further reading
- Alexandra Andersch: The recording of actuarial gains and losses according to IAS 19: The accounting for pension provisions . Bedey Media GmbH, Hamburg 2018. ISBN 978-3-961-46132-5 .
- Stephan Derbort, Richard Herrmann, Christian Mehlinger, Norbert Seeger: Accounting for pension obligations : HGB, EStG and IFRS / IAS 19 . Springer Gabler, Wiesbaden 2016. ISBN 978-3-658-05060-3 .
- Udo Eversloh: Ways out of high pension provisions for GGF pension commitments: strategies for in-house and external solutions, avoidance of a hidden profit distribution or concealed insert . Datev eG, Nuremberg 2017.
