In view of the persistently low level of interest rates, it has become significantly difficult for pension funds and the insurance industry as a whole to generate adequate interest rates. The liberal investment rules of the pension fund can therefore quickly become a boomerang for outsourcing companies in the form of additional funding obligations. Kenston Pension GmbH, as your consulting partner, will show you the measures that can be taken in tax and business management consulting to react to this.

The continuing low interest rate environment presents the insurance industry with major challenges. It is becoming more and more difficult to keep the pension promises made. Above all, the “older” salaried generations with guaranteed interest rates at rates far from today’s levels are a burden on life insurance companies. And last but not least, in July last year BaFin announced that it was in more intensive talks with 45 pension funds out of concern about benefit cuts. This development will most likely negatively impact pension funds across Germany

The question that companies who use to outsource pension responsibilities now ask themselves, what are the real risks now to pension funds, can they safely provide the benefit obligation. An adverse situation where a corporate has further obligations to make additional contributions is certainly no longer as absurd as it was suggested when the consultants implemented the outsourcing. In its current consulting practice, Kenston Pension GmbH was able to record more than ten cases of additional funding obligations with clients in the 2018 financial year. Particularly serious are those cases in which the obligation to make additional contributions stems from the insolvency of the sponsoring company which has occurred in the meantime.

Changes to the implementation method

In terms of occupational pension law, outsourcing to a pension fund is a change in the implementation method. Just as the company has changed the implementation route from a direct commitment to a pension fund in the course of the outsourcing, this is of course now also possible from a pension fund commitment to a direct commitment. Even though the operator of the pension fund will certainly not be happy about this and will have to fear a corresponding outflow of funds, it will have to agree to the change of implementation method from a legal point of view. With the change of the implementation channel back to the direct commitment, the obligation is back in the company. However, as the company will continue to be interested in a release from liability, it is only “parked” here.

Further outsourcing

For example, the “re-transferor” company can use the cash recovered from the pension fund to tackle a further outsourcing. This time, however, in the form of complete debt relief without additional funding obligations. Here, for example, an outsourcing in the form of debt assumption and debt assumption is to be considered, especially in the case of direct pension commitments to controlling shareholder-managing directors of corporations. In the case of larger Corporate workforces, solutions in accordance with the Transformation Act in the form of spin-offs or spin-offs should be considered (so-called pensioner companies). It is very advantageous that the price for the outsourcing of pension obligations with the help of debt assumption or debt assumption can be freely agreed. In addition, there are no operating, administration and administration costs known from the insurance sector. For this reason, transfer fees agreed between the contracting parties directly affected will be far below the amounts that insurance companies will demand.

In this context, Kenston Pension GmbH is your partner and service provider for all questions concerning the outsourcing of company pension obligations. In addition to the corresponding consulting services, we also administer and administer specially established pension companies for the direct assumption of pension obligations. Talk to us!