Support fund

As a legally independent provisioning organisation, a support fund does not form part of the company. It is not subject to regulation by the insurance supervisory authority.

One particular feature of the support fund is that it does not grant any entitlements to benefits. In principle, however, the support fund is obliged to provide the benefits scheduled in the benefit plan. If it is not in a position to do this, for example because the employer has not made the requisite funds available, the employer is liable for the promised benefits. Under this model, the risk to the employer can virtually be excluded by taking out life assurance in the same amount. The costs to the employer for this are tax deductible.

In the event of insolvency, the commitments for benefits from the support fund are secured via the Pension Insurance Association.

Support funds are particularly attractive for executives and high earners because of the clear tax advantages and limited flexibility with regard to contributions.