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As of 2016, some pension insurers have reduced the originally promised pension factor for unit-linked pension insurance. This may be inadmissible, as a recent ruling by the Cologne Regional Court (ref.: 26 O 12/22) shows.
Fund-linked pension insurance
Unit-linked pension insurance includes, for example, company pensions, basic pensions, Riester pensions and other private pension plans. Many of those affected were informed by their insurance company that their pension factor had been reduced.
Some companies have reduced pension insurance below the originally agreed pension factor since 2026. The justification was usually that the interest rates were too low, the interest rate development was poor and therefore the returns were poor.
Do you have to accept the pension reduction?
You should review such communications carefully. This is a significant reduction in their pensions. In the case of Zurich Insurance, the Cologne Regional Court declared a corresponding reduction in the pension factor to be inadmissible. Although this cannot necessarily be applied to all other contracts, it can serve as a guideline.
What does “pension factor” mean?
What does “pension factor” mean?
The pension factor represents a calculation that determines the exact amount of your future monthly pension. This is determined by an amount times every 10,000 euros of the pension assets saved.
Pension factor times 10,000
For example, if this pension factor is 50 euros per 10,000 euros of capital and you have saved 100,000 euros, then this will result in a monthly pension of 500 euros. Reducing the pension factor means: you receive less pension. If the insurance company now reduces the pension factor to 40 euros, then in this example it is only 400 euros per month.
Adjustment clause is not permitted
In the case of Zurich Insurance, they included a so-called adjustment clause in the contract to reduce the pension factor. This clause reserves the right to adjust the pension factor accordingly. The Cologne Regional Court declared this adjustment clause inadmissible and ineffective.
How did the court justify the verdict?
According to the court, this clause runs counter to the basic idea of changing premiums and benefits in the Insurance Contract Act and is not compatible with Section 163 VVG.
Does the ruling only apply to Zurich Insurance?
Although the judgment referred to Zurich Insurance, the reasoning can be transferred to other pension insurance contracts because the relevant clauses are similar.
Do we check your pension factor?
You will find the pension factor in the annual status report from your pension insurance company. You can compare this over the years and see whether it has been reduced.
What to do if your pension factor has been reduced?
If your insurance company lowered your pension factor, then after the Cologne judgment against Zurich Insurance you have a good chance that the original pension factor will have to be calculated. You can have the possibility of an objection examined, inform your insurance company and – if they refuse – take legal action.
Dr. Utz Anhalt is an author, journalist and historian. In 2000 he completed a Magister Artium (MA) in history and politics at the University of Hanover. His focus is on social law, social policy and natural sciences. He was a research assistant on documentaries for ZDF, History Channel, Pro7, NTV, MTV, Sat1.
2024-01-11 10:50:58
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