GERMANY - The German federal court (Bundesgerichtshof) has ruled that additional payments demanded by the supplementary pension scheme for German public employees (VBL) were legitimate.

The verdict is the final ruling in a series of appeals preceded by similar verdicts by two regional courts - the Landesgericht and the Oberlandesgericht in Karlsruhe - from spring 2008 and 2009, respectively.

Only one court in Mannheim had agreed with the plaintiffs, who argued in April 2010 that this additional levy had underestimated the relation between contributions and pension payments and thus breached the equivalence principle, as some of the contribution was used to finance other members' pensions.

The federal court now confirmed the legality of the VBL's restructuring and its right to levy additional payments.

In 2008, three public authorities filed the lawsuit against the VBL, which is managing around €15bn in supplementary pension schemes for public employees on a federal and provincial level, as well as for some municipalities in the north-west of Germany, where no local schemes exist.

They argued that the levying of additional payments for public employees in Western Germany was unlawful and "arbitrary", and that the VBL's restructuring lacked a sound legal framework.

In 2001, the old VBL structure had been closed, as it was deemed financially infeasible to top up every public employee's state pension to a certain level.

Instead, a system was introduced in which each public employee collected points according to his years of duty, as well as for maternity and sick leave.

However, to finance the transition between the systems, the VBL and its members had agreed on so-called 'top-up premiums' (Sanierungsgelder) for certain groups of public employees between 2002 and 2005.