A German federal labour court ruling in favour of Commerzbank’s decision not to adjust a retiree’s occupational pension highlights companies’ prerogatives and employees’ rights, lawyers say.
Thomas Granetzny, partner at law firm Freshfields, told IPE the court’s decision is “consistent and reasonable”.
The main takeaway of the court’s decision is “the fact that the financial outlook of a company is better than the company expected does not lead automatically to an adjustment of the occupational pensions”, Granetzny said.
He added that the ruling provides companies with planning certainty and gives beneficiaries clarity on when adjustments will be made.
At the end of October, the Federal Labour Court sided with Commerzbank’s decision not to adjust the pension of a former employee in line with the German Company Pensions Act (BetrAVG).
Marco Arteaga, partner at law firm Luther, described the ruling as “correct”, drawing a line on the supposed obligation of employers to adjust occupational pensions.
Companies will now “examine very critically” future adjustments in the event of insufficient returns on capital, he said.
Frankfurt-based Commerzbank withheld a pension adjustment for a retiree due to insufficient return on equity recorded between 2019 and 2021.
The plaintiff argued that the bank’s assessment, limited to the three years preceding the adjustment date of 1 June 2022, ignored the COVID-19 pandemic’s distortions and failed to account for a positive financial outlook that emerged afterwards.
The court, however, upheld the bank’s position, noting that subsequent improvements in returns did not contradict the decision.
René Döring, partner at Linklaters, told IPE the ruling clarified how performance forecasts can be applied for future adjustments.
The court clearly considered the three years prior to the adjustment date sufficient to assess whether an adjustment is justified, despite the special effects of the COVID-19 crisis, he said.
“Even more interesting is the fact that the employer was able to successfully rely on a forecast of future economic difficulties, based on historical data, that would preclude an adjustment, even though this forecast had proven inaccurate,” he continued.
Döring added that the decision removes concerns that “suspension decisions” could be deemed inadmissible if forecasts later prove inaccurate.
Under the Company Pensions Act, companies are only required to review potential pension adjustments every three years.
Traditionally, German firms adjusted pensions to match inflation when prices were low.
Between 2022 and 2025, amid higher inflation, some companies linked adjustments to the net wage upper limit—a choice that carries legal risks, Freshfields’ Granetzny said.
In these cases, the employer reviews the full employment period rather than just the last three years.
“Wage increases were traditionally higher than inflation. This strategy typically does not lead to lower costs and comes with other legal uncertainties,” Granetzny added.
Arteaga noted there remains a “misunderstanding” of the law’s intent regarding adjustments.
The theory behind adjustments of occupational pensions is that the employee contributed to improving the financial situation of the company; thus, only when profits are recorded, an adjustment is justified, he said.
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