Pursuant to BetrAVG, a provident fund is a legally competent pension institution equipped with special funds that organizes the implementation of a pension commitment for an employer and carries out company pension benefits for employees , former employees and, if applicable, their surviving dependents. The relief fund always represents an independent, independent legal and tax entity and can be organized in the form of a GmbH , a registered association or a foundation .(4)
Since a benevolent fund has no legal entitlement to its benefits, it is not subject to insurance supervision and is "free" to invest its assets. In the case of lump-sum benefit funds, it is a common model to freely invest the contributions to build up the pension with the employer (in the sponsoring company) (internal financing). In the case of reinsured relief funds, the benefits promised by the employer are usually fully (congruently) covered by reinsurance .
The relief fund itself does not grant any legal entitlement to benefits.
In fact, this is insignificant for members of the pension scheme and recipients of ongoing benefits ( pensioners ), as (1) BetrAVG regulates: The employer is responsible for the fulfillment of the benefits he has promised even if the implementation is not carried out directly through him ( so-called subsidiary liability).
Subsidiary liability ensures that members and recipients of ongoing benefits ultimately always have a legal claim against the employer in all five implementation channels, not just in the provident fund. This ensures that the company that made the pension promise is responsible for it, even if - as with the relief fund - a third party takes over the implementation of the pension promise on behalf of the employer.
In the event of the insolvency of the employer (sponsoring company), the company pensions for all employees who fall under the law for the improvement of company pension schemes ( BetrAVG ) are secured by the Pensions -icherung -Verein (PSVaG) (according to BetrAVG).
Special feature of support fund commitments with congruent reinsurance (if the pension commitment refers to the benefits of the reinsurance): Since January 1, 2018, insolvency of the sponsoring company has existed for the pensioner according to direct insurance ).paragraph 3 BetrAVG an option. Instead of having the protection carried out by the PSVaG, the pension plan member may take over the reinsurance and continue this privately with his own contributions. The transfer is tax-free in accordance with Section 3 No. 65 EStG (analogous to
For employees who do not fall under the protection of the BetrAVG (e.g. shareholder-managing director), special regulations can be made at the relief fund to ensure insolvency protection, e.g. B. by pledging the reinsurance policy to the beneficiary with reinsured relief funds.
The pledging of the reinsurance also serves to protect against a possible insolvency of the relief fund itself. In practice, some reinsured relief funds therefore generally provide for pledging for all reinsurance policies.
Types of benefit fund
A distinction must be made between the reinsured relief fund - also known as the insurance-like relief fund - and the lump-sum relief fund - also known as the reserve funded relief fund.
Reinsured relief fund
With the reinsured provident fund , the biometric risks of the pension commitment (early insured event due to disability or death of the beneficiary) as well as the pension or retirement capital promise are outsourced to an insurance company in full (congruent reinsurance) or in part (partial reinsurance). In the event of a benefit, the partial reinsurance regularly generates additional funding costs for the employer. At the latest since the introduction of the law for the modernization of accounting law (Accounting Law Modernization Act, BilMoG ) in May 2009, it has been observed that the full funding of pension obligations has come to the fore and that in the vast majority of cases congruently reinsured pension fund commitments are set up.
The employer (sponsoring company) makes voluntary contributions (endowment) to the support fund for financing. To fund the portion of the benefits intended for reinsurance, the relief fund forwards these to an insurance company, which then pays out the benefits in the event of a pension. When the insured event occurs, the promised benefits and benefits from the reinsurance are congruent (congruent).
The unique selling proposition of the support fund with congruent reinsurance in the concert of implementation methods (in the following: pension commitment, direct insurance, pension fund and pension fund) is that it can be used to finance pensions above the limits of Section 3 No. 63 EStG with tax effect. The tax balance sheet is not affected and even in the appendix to the commercial balance sheet, balance sheet neutrality is generated in the case of congruent reinsurance and pledging of the reinsurance (keyword: “automatic zero identification”).
Lump-sum support fund
The lump-sum support fund is the original form of this implementation method. In the case of the lump-sum support fund, the sponsoring company does not build up full entitlement financing, but merely forms a reserve cushion. This process is accompanied by tax. The amount of tax-deductible benefits is not based on actuarial principles, but on the provisions of(1) sentence 1 no. 1 letter b of the Income Tax Act.
The aim of this restriction in Section 4d EStG is, among other things, to avoid improper taxation of loans as a financing instrument on the part of the sponsoring company. A large part of the full funding should therefore only take place when benefits are due.
Tax considerations for the employer - the benefits as a business expense
The employer finances the pension benefits he has promised through donations to the relief fund. It is the commercial goal of the company to be able to recognize the grants (endowments) for tax purposes as operating expenses.
In Income Tax Act (ITA) is defined, to what extent the benefits as a business expense can be claimed. A distinction is made between the two types of support fund and the term business expense is defined as follows:
Business expenses with the reinsured relief fund
In the reinsured relief fund , the operating expense is "... the amount of the premium that the fund pays to an insurer, insofar as it acquires the funds for its pension benefits that the beneficiary or beneficiary can receive according to the circumstances at the end of the financial year of the grant an insurance company. … ” (Section 4d, Paragraph 1, Clause 1, No. 1, Letter c of the Income Tax Act), in other words: the contribution to the reinsurance is a business expense in full.
The number of tax-permissible tariff structures in the relief fund is limited, however. For example, the use of profits “interest-bearing accumulation” in a reinsurance tariff leads to so-called “impermissible cash assets”, so that this characteristic is not used in practice. Likewise, only those unit-linked tariffs can be used that include a survival guarantee from the insurance company from the start (see BMF letter of December 11, 1998, IV C 2-S2144c-4/98 ).
The most important point for the tax recognition of the benefits as a business expense at the sponsoring company is, however, that the contributions to fund the commitment are generally agreed in the same or increasing amount over the entire term up to retirement age.
One-off payments in the form of additional payments in the reinsurance contract or the agreement of an abbreviated premium payment are not accompanied by tax. The funding of the promised benefit should be carried out continuously over the entire period between the commitment and the benefit event. This is to prevent z. B. an expense is brought forward in order to "optimize" the tax effect. An exception according to Section 4d Paragraph 1 Clause 1 No. 1 Letter c EStG are single contributions that are made to fund ongoing benefits (i.e. for company pensioners).
Special feature: In the case of congruent reinsurance, there is full accrual financing for tax purposes.
Operating expenses from the lump-sum support fund
With the lump-sum support fund, on the other hand, the sponsoring company cannot build up full entitlement financing with tax support , but only forms a "reserve cushion". The allowances for the tax-recognized reserve cushion (permissible cash assets) in the qualifying phase are limited to eight times the so-called "possible allowance" according to Section 4d (1) sentence 1 no. 1 letter b EStG. This means that operating expenses in the qualifying phase may only take place for a limited period of the first eight years as well as limited to the amounts shown below.
- In the case of pension commitments, the possible allowance is 25% of the promised annual pension. Eight times this corresponds to 200% of the promised annual pension, so that a maximum of 2 annual pensions in total can be endowed in the reserve cushion until the start of the pension. At the start of retirement, the cash assets can then be increased depending on the gender and age of the beneficiary in accordance with the table in . (Example: At the start of retirement at 67, in addition to the 2 annual pensions already in the fund assets according to the table, a further 10 annual pensions for a female beneficiary and a further 11 annual pensions for a male beneficiary can be endowed to the relief fund.)
- In the case of capital commitments, the possible grant is 2.5% of the committed retirement capital. Eight times this corresponds to 20% of the committed capital and is the maximum amount that can be endowed in the reserve until the benefit is due. When the commitment is due, the benefit fund must be paid the missing 80% of the benefit.
The full funding can therefore only take place when benefits are due.
With both types of support funds, the benefits in the form of administrative costs and fees as well as the contributions to the PSVaG are tax-recognized operating expenses. Benefit fund supplies can be financed in an employer-financed form, in an employee-financed form ( deferred compensation ) or a combination of both (mixed financing).
In contrast to what is described above, the partial values represent the operating expense in the implementation path of the pension commitment , that is the amount that is recognized for tax purposes annually (according to EStG) and leads to an increase in the provision, and in the insurance-like implementation path ( direct insurance , pension fund and pension fund ) the contributions within the framework of No. 63 EStG represent the operating expenses.
Tax considerations for the employee
During the qualifying phase (phase up to the start of the pension), neither employer-financed nor deferred pension payments are due, as there is no inflow in the tax sense (EStG). The social insurance exemption applies to deferred compensation up to an amount of 4% of the contribution assessment limit in the statutory pension insurance west (according to SGB IV). Employer-financed pensions are completely free of social security contributions.
The later benefits from a provident fund are treated like “gross wages” and are subject to subsequent full taxation as income from non-self-employed work in accordance withEStG.
In the event of a change of employer, the capital value , the so-called "cash assets", cannot be easily transferred from the relief fund to other funds, as this would be tax-detrimental. However, this is possible if the new employer is or becomes a member of the same benevolent fund. One portability claim within the meaning of occupational pension law is not, as para. 3 no. 1 BetrAVG this only for the means of implementation of no. 63 EStG provides not for pension and provident funds supplies.
Tax considerations at the relief fund
Benevolent funds are exempt from corporation tax under certain conditions ( (1) No. 3 KStG in conjunction with KStDV) and are viewed as a social institution. Every year, it is checked again whether a support fund fulfills the requirements for exemption.
In the overwhelming majority of cases, benevolent funds strive for the status of a social institution and the associated exemption from corporation tax in order to ensure that the benefits for the beneficiaries - where they are subject to full downstream taxation in accordance withIncome Tax Act - without any deduction Corporation tax arrive.
- Practical manual for the relief fund , German Competence Network for Company Pensions eG (Ed.), Richard Boorberg Verlag, 2019, ISBN 978-3-415-06395-2 . ( Online )
- Tax treatment of relief funds. , Andreas Buttler, Manfred Baier, 6th edition. Verlag Versicherungswirtschaft, Karlsruhe 2014, ISBN 978-3-89952-696-7 . ( Online )