Company pensions: How can a high guaranteed interest rate be secured?

by Martin Reim, Euro on Sunday

I run a physiotherapy practice and in 2004 I took out a company pension scheme for one employee via deferred compensation. The contract has a relatively high guaranteed interest rate. Since the beginning of 2022, employers in the bAV have had to pay a subsidy according to the law. When I wanted to tackle this, the insurer explained that a new contract was necessary – with a lower guaranteed interest rate. My question: is that legal? After all, this solution would be disadvantageous for the employee.

euros on Sunday: That may well be legal. “Whether the subsidy can also be paid into an existing contract depends not only on the respective insurance company, but also on the basis of calculation of the contract and the amount of the subsidy,” says Markus Keller, Managing Director of bAV consultancy febs Consulting in Grasbrunn near Munich. It is quite common for a premium increase to be rejected on the basis of the insurance conditions. “Especially with older contracts, the high guaranteed interest rates are not available for any increases.”

Such a contract increase would exist if you were to add the legally possible 15 percent subsidy – in this case 15 euros – to an assumed previous salary conversion of 100 euros. According to Keller, there is a possible way out: you agree with the employee that the subsidy does not come on top of that, but that the conversion amount is reduced by the employer subsidy, so that the insurance contribution remains constant. Example: With a subsidy of 15 percent, EUR 100 of previous deferred compensation becomes EUR 86.96 as deferred compensation and EUR 13.04 as an employer subsidy. In this way, you also avoid signing and selling costs for a new contract.