Insolvency Insurance of Company Pension Schemes in Germany – Functionality and Current Political Changes

The author introduces the current extension of company pension schemes in Germany and explains the legal necessity for covering non-lapsable future pensions und payable pensions against insolvency of the employer, who is overriding bound to pay the pensions. Succeeding the author illuminates the institution of the German insolvency insurance, the "Pensions-Sicherungs-Verein auf Gegenseitig­keit" (PSV) in Cologne. In 2005 the PSV assumed pensions for around 440.000 retired persons. Updated there are above 60.000 companies, members of the PSV. The PSV possesses a cover volume of above 2.500.000.000 Euros and provides security for pensions and non-lapsable future pensions of around 3.800.000 pensioners and 4.900.000 employees. Closing current plans of changing the funding system of the PSV are explained. Until now, the PSV is financed by an allocation of the annual expenses. However a current draft law plans a capital-covered funding to avoid the current disadvanta­ges of the allocation system (especially unsteady contributions for the employers).