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No pension payments by the employer without a statutory pension entitlement

Under a judgment by the Federal Labour Court (Bundesarbeitsgericht, BAG), an employer is not required to pay out a pension before the age when a statutory pension entitlement arises (judgment dated 13 January 2015, 3 AZR 897/12).

The parties disputed whether and to what extent the defendant, the employer, had to pay the applicant, the employee, a pension from age 60. According to the relevant pension guidelines, pensions were generally paid from the age of 63 or, if the employee is a woman, after reaching the age of 60. The pensions were based on the employees’ salaries and the period of employment and were capped at 75 % of the salaries. Furthermore, the pension is reduced by the amount of any statutory pensions drawn by the employee. The applicant demanded payout of the pension payments irrespective of whether benefits from the statutory pension insurance scheme are drawn.

The Federal Labour Court held that the claim was unfounded. According to the court, the employer is not obliged to pay the pension from age 60 as long as the applicant does not receive a statutory pension. The relevant pension guidelines are to be seen as a total benefit commitment (“Gesamtversorgungzusage”). According to a total benefit commitment, the employer guarantees a certain pension level comprising the occupational pension and the statutory pension. In such a case, it must often be presumed that a pension can only be claimed if, at the same time, a statutory pension is drawn.