BaFin, the German financial supervisory authority, has changed the oversight of employer insolvency rules for the country’s Pensionskassen and Pensionsfonds in the wake of reforms to the overall occupational pension system that came into effect at the beginning of the year.
In a note published on 30 September, BaFin said the two primary external occupational pension vehicles – Pensionskassen and Pensionsfonds – are now required to notify the supervisory authority of the potential impact of an insolvency on asset allocation, employees, funding and contributions.
In the future, BaFin said it expects Penskionskassen – and Pensionfonds offering insurance-based pension plans – to “immediately notify” both itself and the Pensions-Sicherungs-Verein VVaG (PSVaG), the statutory protection institution for occupational pensions in Germany and Luxembourg.
In the case of non-insurance pension plans, the supervisory authority said Pensionfonds were no longer required to notify the body.
A previous BaFin note, published in 2022, required Pensionsfonds offering non-insurance pension plans to inform the body of the specific pension plans for employees of an insolvent firm.
Pension guarantees of non-insurance plans are now calculated based on the best estimate and not on the maximum interest rate (Höchstrechnungszins) used for the estimate of liabilities, or on a conservative mortality table to assess guaranteed benefits of the pension provider, according to the occupational pension association aba.
In addition, for non-insurance plans employers are also now required to make additional contributions to a pension fund during the retirement phase in case of underfunding during the accumulation phase.
A spokesperson for BaFin told IPE that the body had moved to adjust the oversight of occupational pension vehicles to also formally respond to the reform of corporate pensions that took effect in January this year through Betriebsrentenstärkungsgesetz (BRSG) II, Germany’s Second Act Strengthening Company Pensions Act.
Among other things, the reform makes it easier to join social partner models that offer defined contribution plans through Pensionskassen and Pensionsfonds by waiving collective bargaining agreements.
However, the circular does not change the “basic supervisory practice”, BaFin’s spokesperson added.
The employer bears subsidiary liability under the country’s Company Pensions Act – which was substantially updated by BRSG II – and in cases where the liable employer is insolvent, the PSVaG generally steps in, he said.
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