Occupational Pensions: Exclusion of survivor’s pension in case of marriage after early retirement

By judgment of 3 June 2020 (docket number: 3 AZR 226/19) the Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled that the exclusion of a survivor’s pension is justified if the pension plan provides for full pension benefits in the event of early retirement on reaching the age of 50 and if the marriage was only entered into after the termination of the employment relationship.

The parties were in dispute over an obligation on the employer (defendant) to grant a (possible) survivor’s pension to the applicant’s wife. The plaintiff withdrew prematurely from the employment relationship at the defendant’s instigation due to a termination agreement. The pension scheme provided that employees could retire early from the age of 50 and claim a pension. In the event of early retirement at the employee’s own request, the employee could claim the pension from the age of 60; In the case of early retirement at the employer’s request, the employee could claim the pension immediately upon retirement. The pension scheme also provided that – in the event of early retirement – the employer did not owe a survivor’s pension if the marriage was entered into by an employee after his early retirement had already begun. The plaintiff married after early retirement and requested a declaration that his wife was entitled to a survivor’s pension after his death. He took the view that the exclusion of the survivor’s pension is age-discriminatory and therefore ineffective, since there is no exclusion of survivor’s pension for regular pensioners (pensioners not making use of early retirement), but only for younger pensioners like him. The employer rejected this.

The Federal Labour Court rejected the claim and held that the exclusion of the survivor’s pension did not constitute unlawful age discrimination, as it was justified by objective reasons. The difference compared with regular pensioners is justified by the fact that the pension benefit is paid for much longer (and, in addition, without actuarial deductions). This makes it easier for employees who retire early to build up pension cover for surviving dependents from their own pension. If an employer promises and provides substantial additional benefits for early retirement, it can also attach its own conditions and consequences to this in the case of survivors’ benefits in this scheme.

The decision is to be welcomed, as it shows that employers can effectively limit additional benefits through appropriate clauses. However, a precise differentiation and formulation of such clauses is always necessary in order to prevent affected employees from considering them inadmissible and taking action against them.