A Unterstützungskasse support fund may be relevant where additional workplace pension provision is needed, for example for executives or managing directors who are also shareholders. It is a legally independent pension institution. In an insurance-funded model, an insurance policy finances the promised benefits. Before setting one up, existing entitlements, shareholdings and what the company can afford over the long term are considered together.
Relevant products at a glance
These types of product may suit your needs. The specific benefits, limitations and costs depend on the plan you choose and your circumstances.
Distinguish the commitment, fund and insurance policy
The employer makes a pension commitment through the Unterstützungskasse and pays contributions. The fund takes out an insurance policy to finance the benefits and pays the intended benefits to the people entitled to them. ERGO describes this as a model in which the funding insurance matches the promised benefits. The commitment and insurance funding should be aligned; their specific terms remain decisive.
What benefits should the arrangement provide?
Start with needs beyond statutory, private and existing workplace pension provision. Then review the types of benefit, when they begin and any survivor protection. A Unterstützungskasse is a delivery method, not a freely accessible investment account. The specific offer is used to determine which funding insurance policy is available for the arrangement and fits the requirements.
Consider the full funding picture
Expenses include contributions for the funding policy, its policy costs and the support fund’s administration fees. Depending on the arrangement, further specialist reviews or administration services may be needed. Guaranteed benefits must be considered separately from assumed investment performance. Clarify in advance the options for contribution breaks, changes to the commitment, weaker earnings or a later departure.
Special considerations for shareholder-managing directors
For managing directors who are also shareholders, the business purpose, appropriateness and timing requirements of the commitment need to be assessed, among other matters. The funding and later payout phases are assessed separately for tax purposes. Insolvency protection also depends on status and structure. A Unterstützungskasse therefore offers neither blanket tax exemption nor an unrestricted guarantee of protection. Tax advisers and, where needed, legal advisers must be involved early.
Start with a complete overview
Have the service contract, shareholding overview, existing pension commitments and funding policies ready. Add your preferred benefit start date and the cost the company can afford on an ongoing basis. Planned succession or changes in shareholdings belong in the preparation too. Insurance questions can then be clearly distinguished from the necessary company law and tax reviews.
What we'll work through together
- Record status, shareholdings and existing entitlements
- Define the retirement goal and long-term cost
- Align the commitment, insurance funding and all costs
- Have specialists review tax, insolvency protection and succession
Is a Unterstützungskasse a company investment that can be accessed at short notice?
No. It serves workplace pension provision and is tied to the relevant commitment and its rules. Companies cannot use the money like a current business account. Changes and a later departure have their own requirements and consequences. Long-term affordability should therefore be assessed before setting it up.
Your contact for these topics: Joel Montoya Barea. The agreed terms and product documents determine what applies to a policy.
Sources and further information
External sources, mainly in German. The relevant policy terms and your individual circumstances determine what applies to you.