Company pension plan – elimination of surviving dependents’ benefits due to superseding collective agreement provision

Cessation of surviving dependents’ benefits due to superseding collective bargaining agreement (BAG ruling dated July 31, 2018, 3 AZR 731/16)

By Christine Hansen and Jean-Baptiste Abel

In the present case, the employee had been receiving a retirement pension since June 2001 – at the age of 63. The pension scheme applicable at the time of retirement provided for an exclusion of the widow’s pension in the event that the marriage was entered into after the insured event and the employee had reached the age of 65 at the time of the marriage. The pension scheme was later replaced – with explicit reference to active or former employees who had acquired entitlements under a different pension scheme – by a new provision in the collective agreement, according to which the granting of a widow’s pension requires, among other things, that the marriage took place before the insured event occurred. The employee, who married after the pensionable event and before reaching the age of 65, seeks a declaration that his widow is entitled to payment of a widow’s pension.

The BAG ruled that the entitlement to a widow’s pension was not eliminated by the new regulation of the pension scheme. Since a different pension scheme was still in force at the time of the marriage, it would be contrary to the principles of protection of legitimate expectations and proportionality if the spouses’ coverage were to cease completely retroactively. The parties to the collective bargaining agreement are also bound by this. Deteriorating interventions in pension entitlements through collective bargaining regulations would require special legitimizing reasons. The complete cancellation without replacement of a promised survivor’s pension that existed at the time of or after the occurrence of the insured event is generally inadmissible, as this would subsequently devalue the consideration already fully paid by the beneficiary. Since it would be difficult for him to provide a replacement for the lost surviving dependents’ benefits after the occurrence of the pensionable event, at most minor deteriorations would be justified. With the pension scheme, the parties to the collective bargaining agreement created a basis of trust which also binds them in the case of superseding collective bargaining regulations.

Conclusion: With this decision, the BAG first of all confirms that the amendment of collectively agreed pension provisions also extends in principle to pension relationships in which the pension event has already occurred, as the regulatory power of the parties to the collective agreement also extends to pension recipients. The BAG confirms that interventions in pension entitlements are only possible under narrow conditions. This also applies to provisions of collective agreements to which the three-stage examination scheme (BAG ruling dated April 17, 1985, 3 AZR 72/83) does not apply. The examination must be limited to violations of higher-ranking law.