News Problems with the occupational pension: Soon less money for the insured? 

Monday, 07.05.18 , written by Annabell Meyer Since the beginning of the year, new laws have been in place for occupational pensions, which should make provision for employed persons and employers more attractive. But due to the persistently low interest rates, occupational pensions are increasingly in difficulties, warns the Federal Financial Supervisory Authority. Many insured persons are now even  

Pensionskassen haben durch niedrige Zinsen oft Probleme bei der bAV

Employees could face reduced benefits at the BA

  • The persistently low interest rates pose a financial problem for occupational pensions.
  • Above all, pension funds can hardly meet the agreed benefits, according to financial supervision.
  • For example, in order to compensate for financial penalties, those affected may consider various alternatives to invest.

For a long time, the low-interest phase has dominated the financial market and ensures low investment opportunities for secure investment forms. The Federal Financial Supervisory Authority (BaFin) now warns that the low interest rates can also affect the company pension scheme . For many pension funds, it is becoming increasingly difficult to provide the agreed services. It is hardly possible for you to invest the insured’s contributions profitably. But what exactly does that mean for people who make provision for old age through occupational pensions?

Why are there problems with occupational retirement provision?

Above all, employees whose pension plans run through a pension fund must expect problems. In general, BaFin puts banks and insurance companies under more intense supervision when they are in financial difficulties. In view of the poor interest rates, this now affects about one third of the almost 140 pension funds.

In order to avoid payment problems, the Financial Regulator advises them to seek financial support from shareholders and sponsors such as employers. Because without additional capital insured must reckon with benefit cuts , explains BaFin boss Frank reason. According to the Süddeutsche Zeitung (SZ), two pension funds would soon be lowering their agreed benefits – they should not be the only ones left.

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Less money than agreed: Who are threatened with cuts in the company pension?

In 2015, an estimated 4.8 million people had a company pension that runs through a pension fund. According to the SZ many of them could now face lower payments than originally agreed .

Whether or not employees are affected by potential benefit reductions at the bAV is determined, among other things, by the way pension plans are implemented, emphasizes Friedhelm Gieseler, Managing Director of the hospital pension, vis-à-vis the SZ. Thus, there are various ways of implementing the occupational pension: provident funds, direct insurance companies, pension funds, public supplementary pension providers, the so-called Nahles pension and the pension funds various ways of implementation. The economic situation is not problematic for everyone, according to the expert.

Consider alternatives to private provision

In order to increase your private pension as high as possible, it is advisable to take a look at the various possibilities of investing. Because in this case, despite low interest rates still good return opportunities are possible. With an individual comparison you will find the right offer.

Benefit cuts: how can those affected fight back?

Before the reform of the occupational pension, employees have received a pension commitment from their boss. They know how much they pay and what benefits they receive at retirement age. If the pension fund can not pay this agreed amount, employees can claim the difference from the employer , says Gieseler. As a result, they do not have to worry about financial losses if their pension fund gets into trouble. However, if the employer has gone bankrupt in the meantime, the lower payouts can not be averted.

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  • Annabell Meyer
  • editorial staff

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