In times of inflation, both employers and beneficiaries worry about how the devaluation of money will affect company pension plans (bAV). Pension commitments are generally the most long-term obligations of a company and usually involve a significant financial volume. At the same time, for employees they are an essential part of their compensation, which secures them for their old age in the long term and is intended to bind them to their employer.
Inflation may cause required expenses for employers to increase further than they already have. Measures taken by companies to minimize risk usually only take effect for newly designed, future pension commitments. The conversion of an existing pension commitment into a lump-sum payment is only permitted under very strict conditions.
Depending on the structure of the commitment and the phase of working life in which inflation occurs, however, pension beneficiaries also lose out when their entitlements are devalued. In principle, only current company pension benefits must be adjusted by law to reflect current circumstances, such as the development of the consumer price index. Only in exceptional cases is a pension entitlement also subject to dynamization.
Christine Hansen, a specialist in employment law and senior manager, is an expert in occupational pension schemes. In the podcast, she describes how inflation affects different types of pension plans, the legal options employers have for relief, and the importance of adjustment reviews as part of good and sustainable pension management.
The core topics of the podcast:
All “KPMG Law on air” episodes can be found here.
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