Pension obligations financing and insolvency protection from the professionals
At a glance
- German employee protection legislation requires long-time and lifetime accounts to be protected from insolvency (under the Act to improve conditions for the protection of flexible working time arrangements and to amend some other laws – “Flexi II Act”).
- Collective pay or company-level agreements may require insolvency protection for short-time accounts, too.
- CommerzTrust covers the entire master trust infrastructure.
As your CTA partner, CommerzTrust offers a comprehensive range of services:
- Contract design, in cooperation with external auditors, tax advisors, and lawyers
- Investment solutions, provided together with Commerzbank and other partners
- Set-up of trust accounts and trust securities accounts
- Settlement and disbursement of employee claims in case of insolvency
- Comprehensive administration services
Benefits of funding your pension obligations with CTAs:
Balance sheet effects
Transferring assets to a CTA allows you to build up plan assets that can be offset.
Building up plan assets ensures that capital is put aside early for later payments.
Capital investments can be tailored to your company’s pension obligations.
Plan assets may be built up gradually, depending on your company’s liquidity situation.
A CTA provides insolvency protection for employee claims that are not protected by the German Pension Guarantee Association (Pensionssicherungsverein).
Founded in 2006 as master trust provider, CommerzTrust GmbH offers specialised products and services to medium-sized and large enterprises. We focus on funding pension obligations and providing insolvency protection for working time accounts such as partial retirement, short- and long-time accounts, and employee credits (Arbeitnehmer-Wertguthaben) under the German Flexi II Act. We also offer insolvency protection for other employee claims (e.g. severance payments).
After you have transferred the respective offsettable plan assets to CommerzTrust GmbH, they will be managed under an administrative trust scheme, where you remain the beneficial owner. Upon request, Commerzbank’s investment experts will be happy to set up an investment strategy focused on the specific cover purpose.
Alongside the administrative trust scheme, an agreement to the benefit of a third party – a security trust – will protect your employees. In the event of insolvency, the entitled beneficiaries can contact CommerzTrust directly and claim the trust assets.
We’ve built our expertise through the provision of efficient schemes for more than 100 corporate clients. This should allow us to implement your solution, depending on the circumstances and after clarification of the contractual requirements within a matter of days.