(1) The employer’s pension commitment has to serve a pension objective that is regulated in the German Occupational Pensions Act and the obligation to pay pension benefits has to be triggered by a biological event specified in the legislation. Moreover, it is assumed that through the planned benefit a biometric risk that is mentioned in the legislation will be at least partially accepted.
(2) With the commencement of a reduction in earning capacity, an inability to work or occupational disability the criteria for the biometric risk of invalidity will have been basically fulfilled. This would also apply even if the benefit entitlement is not additionally linked to the employee actually being restricted in the exercise of their profession as a result of the commencement of the degree of invalidity. However, with respect to their pension commitments, employers are however free to restrict the benefit entitlement to that effect.
(3) Basic skills insurance would likewise serve to protect against the biometric risk of ‘invalidity’ and, therefore, meets the requirements under the German Occupational Pensions Act. By contrast, insuring the risk of longer-term incapacity for work does not constitute protection against the biometric risk of ‘invalidity’ and, therefore, cannot be used for an occupational pension scheme.
(4) If the vehicles for old-age provision of direct insurance, Pensionskassen [legally independent insurance companies that entitle employees or their surviving dependants to retirement benefits] and pension funds include an agreement for an exemption from premium payments for certain periods (e.g., during periods of incapacity for work and periods when employees receive sickness benefits) then this would not preclude recognition as an occupational pension scheme for tax purposes.
(5) There would be no scope for a reduction in the taxable allocated charges while an additional financing requirement exists in the form of the so-called tax-exempt recapitalization payments (Sanierungsgelder).
(6) If employees avail themselves of the option of the additional capital accumulation benefits provided by employers for the building of occupational pensions and, within the
framework of salary sacrifice, make use of these benefits via the vehicles for old-age provision of pension funds, Pensionskassen or direct insurance then such contributions would be tax-exempt within the statutory limits. This would also apply to the supplements given by employers in this connection (e.g. increased amount for occupational pensions of €26 instead of capital accumulation benefits of €6.65) and for supplements given by employers that depend on an additional salary sacrifice (e.g. an increased contribution to the occupational pension of €50 if the employee sacrifices €13 of their remuneration).