• Human Resources & Corporate Learning

Company Pension Plan – Lump-sum funded support fund

The company pension scheme is an excellent instrument for supporting your employees in making private provision for old age.

By using a lump-sum funded support fund, your employees receive a significantly higher pension benefit than with insurance industry solutions, as these are associated with significantly higher costs. 

As an employer, you have a wide range of options for designing the pension plan to meet your requirements. You are free to define all the essential parameters and create a real benefit for your employees. 

The lump-sum funded support fund is an all-round talent and creates additional value for your company!

The lump-sum funded support fund ensures that your employees’ monthly contributions do not flow out of the company but continue to be available. So, you not only create your employee pension fund, but also your own bank within the company! 

Detailed information on the financing effects of the lump-sum funded provident fund can be found HERE.

Application example:

An employer asks its specialist advisor for the company’s lump-sum funded provident fund to inform a new employee about the company’s offer of a company pension plan. The employee wants to know from the specialist advisor what guaranteed lump-sum benefit he can expect when he reaches retirement age. Alternatively, he has an offer from a German insurance company for a direct insurance policy.

The employer has specified a possible deferred compensation of EUR 100.00 per month in the pension plan regulations for the pension fund and grants an employer subsidy of 25% of the contribution. This means that EUR 125.00 per month is invested in the pension fund. Interest is paid on the contributions and the employer subsidy at 2.0% p.a. in each case.

The calculations show that the employee, who is 22 years old, can receive a lump-sum benefit of EUR 106,892.66 from his employer’s pension fund at the age of 67. The guaranteed benefit of the direct insurance offered to him by his insurance company is EUR 77,846.00.

It turns out that there is a potential disadvantage of around EUR 29,000.00 (!). If the employer opts for an annuity instead of a lump-sum payment, the disadvantage increases significantly again.

The insurance company must therefore achieve a significantly higher interest rate in order to reliably achieve a comparable maturity benefit and to generate its costs as well as the calculated profit. Since the latter two items are taken into account in any case, deviations from the required interest rate will in any case affect the employee in the form of a poorer return.

We are a cooperation partner of the AUTHENT – Group, Nuremberg one of the most established providers in Germany for the lump-sum funded provident fund, in cooperation with AUTHENT lawyers, auditors, tax consultants.

As a specialist advisor for entrepreneurs, tax advisors and auditors, we will advise you in detail and work with you to implement your own employee pension fund and bank in the organization. We also advise your employees on the opportunities that arise for them from the establishment of a pension scheme for your company. We also ensure the necessary long-term support of your company around the pension scheme by means of a full management concept. This full management goes far beyond the usual services provided by insurance companies.

The conception and implementation of the lump-sum funded provident fund is carried out by a team of specialists. In this way, the business and human resources requirements of your company are met, legal certainty is created and the liability potential associated with the company pension scheme is outsourced.

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We see ourselves as MAKERS, partners and project managers for our clients with the aim of pushing their future viability. With our high level of practical knowledge and our many years of international experience, we work worldwide.