Servus #1

December 2020

Our current newsletter deals with topics such as “Security Assessement Ceilings”, “Announcement of the Introduction of a Digital Pension Summary”, “Pension Security Association (PSV): Contribution Rate 2020”, “Increased Demand for Company Pension due to Corona” and much more.


EPF Euro-BetriebsPensionsFonds e.V. (EPF)

The EPF is one of the benefit funding vehicles administered by Profion. As a support fund in the form of an association, the EPF held its annual general assembly on November 13, 2020, primarily for the approval of the annual report of 2019. The EPF now has more than 200 member companies and continues to grow; the number of members increased by 11% and the available coverage capital by even 19%, in contrast to the previous year. The current annual report can be found here(password required).

Draft of the Social Security Assessment Ceilings

The Ministry of Labour’s draft of the anticipated social security assessment ceilings for 2021 is now available. The social security assessment ceiling (West) for state pensions is expected to increase from EUR 82.800 p.a. in 2020 to EUR 85.200 p.a. in 2021.

Announcement of the Introduction of a Digital Pension Summary

On August 26, 2020, the German cabinet presented a government bill on the Digital Pension Summary Law, which was adopted by parliament on November 19, 2020.

The draft envisages the setting up of a Central Office for the Digital Pension Summary at the German Pension Fund. The digital pension summary is a portal solution that is supposed to bundle information on the statutory, occupational and private pensions in order to provide a personalised and expectable level of benefits.

There are still many questions, ranging from the comparability of the benefits to the protection of data. The portal should go online in the fall of 2023.

Pension Security Association (PSV): Contribution Rate 2020

The Pension Security Association contribution rate for 2020 in the amount of 4,2 per mil was adopted.
The average in the last years was 2,8 per mil. The PSV expects a further increase next year.

Insolvency Insurance of Pension Funds Commitments

Up until now, occupational pension commitments from a direct insurance and pension funds are exempt from the insolvency insurance of the PSV.

This will change from 2021 for so-called regulated pension funds (not life insurance pension funds).

In 2021 the contribution amount will be 3 per mil of the calculation basis. From 2022 until 2025, a further 1,5 per mil will be added to the respective contribution rate set for the corresponding year. The determination of the calculation basis is carried out in the same manner as for support funds.

The employer making the commitment is liable to pay contributions, however, it is possible for the pension fund to take over this obligation. This insurance will safeguard against the employer’s insolvency after December 31, 2021.

Insurance Carriers Under Pressure

Last year the German Association of Actuaries (DAV) called for a reduction of the maximum interest rate. The Federal Supervisory Institution for Financial Services (BaFin) also regularly reviews the insurers’ guarantees and has increasingly warned insurers, given their obligations, not to accept them.

The German Ministry of Finance usually follows the recommendations of the DAV and BaFin, however, contrary to expectations and due to the Corona crisis, it did not do so.

Nevertheless, some insurers have reacted:

  • Alte Leipziger Lebensversicherung will reduce the guaranteed rate of interest on its classic tariff from 0,9% auf 0,5% at the beginning of 2021
  • Allianz Lebensversicherung will, where it is not a legal requirement, completely do away with the 100% contribution guarantee in its new occupational pension scheme concepts
  • Other insurers like Proxalto oder R+V have also announced similar tariff adjustments in 2021

The insurers hope that the withdrawal of future guarantee promises will afford them more freedom in investments and to achieve higher returns for the benefits.

Increased Demand for Company Pension due to Corona

As a result of the far-reaching constraints on their day to day lives, people are looking for security, also in relation to the protection of their labour and standard of living in old age. This was the conclusion arrived by a study carried out by YouGov Deutschland. The study surveyed 3.647 employees from the age of 15, such that the results are representative of the workforce in Germany. The study shows that employees value employer financed occupational disability and retirement benefits more than ever.


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