1. Problem definition
With increasing demand and the increasing spread of the flat-rate benefit fund, the questions of how the flat-rate benefit fund should be treated in payroll and financial accounting also increase.
As an internal, insurance-free implementation path, the treatment is systematically different from implementation paths such as pension funds, direct insurance and pension funds. With these implementation methods, the conversion of remuneration flows 1 to 1 to the pension provider or a monthly employer contribution is paid accordingly on a monthly basis. None of this is the case with the lump-sum support fund.
2. Function of the flat-rate U-fund to understand the basics
The lump-sum benefit fund is a so-called internal or corporate or insurance-free implementation of company pension schemes. It basically works without insurance and without the obligation to transfer liquidity. The primary goal is therefore to create or tie up liquidity or liquidity reserves for corporate financing or to achieve bank independence through internal financing (alternatively also free capital investments apart from insurance). Further goals are to strengthen employee loyalty and gain advantages in recruiting.
The function is very simple:
The deferred compensation or a monthly contribution provided by the employer are not transferred to an insurance company, but remain in the company and are available to this company over the long term. The employer pays interest on these monthly contributions from deferred compensation and / or an employer allowance and then pays this amount to the employee as a one-off contribution at the start of retirement. As a result, this is as easy and transparent for the employee as a savings book, which is also built up through contribution (payment) and interest. The payment obligation is precisely calculable and transparent for everyone and the time of payment is fixed from the start, regardless of whether the employee leaves or stays.
A simple example of the lump-sum benefit fund to understand: From the employer’s point of view, the pdUK can be compared to a loan from the employee to the company, at a fixed interest rate with a fixed term. This loan grows transparently and comprehensibly through every deferred compensation and the agreed interest.
From the employee’s point of view, the comparison with the example of a savings account on which monthly payments are credited is most understandable. These pay interest and are verifiable and understandable for everyone.
3. The steps in detail
– The employer withholds contributions and pays interest on them for the employees
– Employer creates these contributions (any capital investment)
– Employer uses the tax effects of § 4d EStG (endowment and direct award) at the same time
– The employer pays the promised benefits to the employee at the start of retirement.
As a result, the internal financing effect is comparable to a direct commitment with pension provisions (pension provision corresponds to a loan). However, the loan interest and the endowment must actually be paid. The endowments are much more flexible (0 € to the maximum tax amount, it is possible to postpone the endowment and thus the expense into the future).
4. Posting the allocation and the interest in the financial accounting
Doping
– Annual calculation of the maximum funding by the relief fund or its management company
– Entrepreneur determines the level of funding, depending on the result
– The relief fund creates the notification of funding
– The company transfers the endowment to the relief fund
– The relief fund draws up a loan agreement or supplement
– Company signs
– The relief fund pays out the loan or grants back the endowment
Eachincrease in doping:
Expenditure on retirement benefits to the bank
Booking when granting a loan:
Bank on loan
interest
– The relief fund calculates the interest expense annually,
Ticketing: Interest expense on liability
– Company pays interest
Ticketing: Liability to bank
– U-kasse creates a supplement to the loan agreement about the interest and pays out
Ticketing: Bank on loan
More bookings are not necessary in this regard. These bookings are made once a year
5. Posting of deferred compensation in financial accounting
The employee has a lower gross and lower social security contributions. In the payroll accounting, the salary is reduced accordingly and social security and wage tax are calculated on this basis. The reduced salary is processed as usual.
6. Booking of the employer’s allowance in the financial accounting
The employer’s subsidy does not result in a payment obligation or liability. Art 28 EGHGB. A booking is not made in this respect. If the employer makes a contribution at the end of the year, the booking is made as described above.
7. Treatment of deferred compensation in payroll
– wages are reduced (visible and transparent)
– There is no debt to third parties
– No clearing account is posted
– Personnel costs decrease
– Either visibly reduce the salary or make some other record in wage documents
– No income tax on the converted amount
– No social security on the converted amount
8. Treatment of employer contributions in payroll accounting
Employer contributions are only fictitious, but not to be booked as such.
– Employer contributions are shown in the commitment
– Monthly contribution + interest
– there is basically nothing to book here
– no ID in pay slip
– Employer contributions only have an effect on the funding (2.5% of the capital commitment)
– If funding is required, payments and postings are triggered in the financial accounting as above:
• Expenses for company pension schemes to the bank
• Bank on loan
• Interest paid to the bank
• Bank on loan
Conclusion
If the system has been understood that, on the one hand, a commitment has been made on the basis of deferred compensation and, if applicable, employer subsidies, which, however, has no accounting effect other than a salary reduction, the handling is easy.
In accounting, only the endowment as the generation of business expenses triggers postings, as does the refund and the interest payments. In the event of a benefit, the loans are repaid to the relief fund with no effect on income.
I would be happy to advise you in a non-binding initial meeting or you can contact us by email.
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