Should an LLC owner be earning a salary

Company pension scheme for managing directors

Why does a company pension scheme make sense for managing directors?

Close the pension gap with a company pension

You run a company and invest a lot of time and passion in your company. The income is correct, but what happens after your active time? It is important here that you already have your Retirement think. Because often the statutory pension insurance is not responsible for you or you are only a compulsory member. So there is a threat large gaps in supply. That is why the company pension scheme is usually a good solution for you. But not all managing directors are the same. Depending on Your status you will be treated differently in the company pension scheme. Sometimes it is not even possible to complete one.

You will find out whether and how it works for you in the next few chapters. On our separate page you can find detailed information about company pension schemes in general:

This is how the company pension scheme works

Which managing director is entitled to the company pension?

bAV for employed and non-involved managing directors

Many managing directors are also employed by a company and are not involved in it. It does not matter whether it is a corporation or a partnership - in terms of tax and social security law he is considered a normal employee. So he can also take out a company pension. Since he usually earns well, he often has an increased need. Often such employment contracts are also concluded for a limited period of five years. That's why the Vesting regime more attention here. Because when changing jobs, certain deadlines apply, in which the employer contributions can be taken.

bAV for managing directors with minority interests

If a shareholder-managing director of a corporation has a minority stake in the company, he is treated the same as a managing director without participation. He is Employee subject to social insurance and, like the other employees, can benefit from the company pension scheme.

It gets a little more complicated when several Shareholder-managing directors have a minority stake in a company and together hold the majority of the voting rights. They are all listed in the company pension scheme as controlling shareholder-managing director viewed. For this apply special rules when issuing a pension commitment.

bAV for controlling shareholder-managing directors

A controlling shareholder-managing director of a corporation (e.g. a GmBH) holds the majority of the voting rights. In terms of social security law, he will viewed as self-employed. For him the social security obligation and thus also the provisions of the company pension law do not apply.

Nevertheless, the dominant partner is the managing director still an employee and is entitled to a salary. Therefore, a company pension commitment based on his employment relationship is possible for him, which is also recognized under tax law.

No company pension scheme for managing directors of partnerships

As a sole trader you are an independent entrepreneur. Therefore, it is not possible to make contracts with yourself to make, let alone give yourself a company pension commitment. So the employment contract is missing, because an employment relationship must also exist for a company pension scheme. The sole trader can only take out a private pension (e.g. Riester pension or Rürüp pension), for which tax incentives are also possible.

This also applies to managing directors of partnerships (KG, OHG), who are also shareholders are. Because your income from managing director activity is viewed as a self-employed activity. A managing director of a GmbH & Co. KG is also considered an "independent entrepreneur" if he at the same time limited partner and the management of the KG is the sole business purpose of the GmbH.

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How can the managing director design his company pension?

Additional benefits for the company pension

Is a Managing director subject to social insurance, he pays contributions for the statutory pension insurance - this from the part of his income that is below the contribution assessment ceiling (BBG). So he enjoys a certain basic security. With the company pension he can do the statutory pensionwhich is usually low, stock up. In addition, he can also do an operational Disability pension or one Survivors' pension so that gaps in the statutory supply are closed. It is also possible, royalties or Special payments into the company pension scheme investwhich means an extra cushion for retirement.

company pension without statutory pension

There dominant shareholder-managing director under social security law as Self-employed apply, they are not subject to compulsory pension insurance. It is possible that you make voluntary contributions to the statutory pension insurance. However, it makes more sense to rely entirely on company pension schemes. Especially if they employer-financed it becomes really attractive for a managing director.

The company pension is in full operating expense and diminishes the company's profits. This means that the relationship between the funds used and the amount of subsequent care is optimal. In addition to the old-age pension, other modules are also possible here, such as a pension for the surviving dependents or insurance against occupational disability. However, they are legal requirement in terms of the design of the pension commitment.

Which way of implementing the company pension do managing directors choose?

Direct insurance, pension fund and pension fund

There are several ways in which shareholder-managing directors (GGF) can close their pension gaps. A combination from different implementation routes is possible. Basic stock company pension schemes can be:

The Contributions are within the scope of deferred compensation up to a certain assessment ceiling tax free (up to 8 percent) and free of social security contributions (up to 4 percent). They are also tax requirements for GGF not so strict as in the case of the direct commitment and the support fund. Reason: These ways of implementing the company pension are handled by an external pension institution. The company is only responsible for paying the contributions, the balance sheet remains unaffected.

Combination with direct commitment and support fund possible

Nevertheless enough a company pension through these three external implementation channels often not offin order to later enable a partner-managing director to receive an appropriate pension. Because be Salary is often above the income threshold - In 2021 this will be 85,200 / 80,400 euros annually (west / east). Therefore, the direct commitment (pension commitment) or support fund can be a complement be. Our specialist for company pension schemes, Frank Heide, even advises you to rely on these two implementation methods right from the start, as the tax-free contributions unlimited are.

For the Direct confirmation the entrepreneur usually creates provisions in the balance sheet. In order for these to be tax deductible, various requirements are necessary, which are described below. If provisions are not desired in the balance sheet, there is also one reinsured relief fund at. In this case, an external institution takes care of the processing of the company pension.

The choice of the company pension solution should be well thought out

If a partner-managing director wants to build up a company pension plan, it is a complex matter and requires one holistic planning. “Most of the time, an experienced consultant, a tax advisor and a lawyer need to work together,” says our specialist Frank Heide. Because it often goes around very high amountsthat are to be invested in the company pension: "You always have to ask yourself whether a company can afford this in the long term."

According to Heide, which solution and products a shareholder-managing director or a company ultimately decides on always depends on him personal situation now and then Company preferences. “If a company wants to structure its retirement provision very flexibly, a direct commitment is suitable. Here you can arrange the payments individually and the payment of royalties is also possible. ”However, the direct commitment also affects the balance sheet.

25 to 35 percent more pension benefits thanks to Smart Pension

If a company does not want this, it can also choose the form of the relief fund or the direct commitment combine. “In the support fund area, we often recommend the model for shareholder managers Smart pension, which offers special conditions, "says Heide:" On average we achieve 25 to 35 percent more pension benefits than with normal managing director provision. "

This is how you go from one at Smart Pension Life expectancy which is lower than with conventional relief funds: “This increases the monthly pension. Only if the policyholder lives longer than the calculated final age does the company usually pay extra. "

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These tax peculiarities apply to managing directors at the company pension scheme

BAV is not always recognized for tax purposes

The benefits of the company pension scheme for partner-managing directors are not always recognized for tax purposes. In particular, with the direct commitment and the relief fund, the expenses are from a tax point of view Business expenseswhich reduces corporate profits. As a result, the company pays less corporation and trade tax, although it benefits from the company pension scheme. Therefore apply to the tax authorities conditionsso that the bAV recognized for tax purposes becomes. These must be particularly important for the company pension scheme of dominant GGF must be followed.

Requirements for tax recognition

  • Formal requirements: The pension agreements made must be clear and unambiguous and recorded in writing. An employment contract with deferred compensation is also required and the company pension must refer to it. Otherwise a managing director can be accused of a hidden profit distribution.
  • seriousness: The pension commitment must also be serious. Its purpose is to ensure that the managing director is provided for later. Seriousness is called into question, for example, if an existing commitment is canceled for no good reason.
  • Financeability: The managing director's company pension should be affordable. The contributions must therefore not tear too much of a hole in the company's coffers.
  • Earnability: The authorities ensure that the supply is appropriate and affordable. Among other things, this means that there is at least ten years between the granting of the commitment and the planned retirement. The agreed pension should also not be higher than 75% of the active salary.
  • Waiting periods: The company must have existed for at least 5 years. The GGF should also work for the company for more than 2 to 3 years. The authorities want to see that it has proven itself.
  • Exemption from the prohibition of self-dealing: By contract, the employment relationship must be expressly exempt from the prohibition of self-dealing - also known as the prohibition of self-contracting. This must be entered in the commercial register. This means business that the agent concludes with himself. When concluding a contract, he acts on his own side in his own name and on the other in the name of someone else.

Possible tax implications

The company pension scheme has tax implications for the managing director and the company during the savings and pension periods. For the external implementation channels Direct insurance, pension fund and pension fund the rules are right clearly. The expenses count as Business expenses. The contributions are exempt from income tax up to a certain upper limit. The later pension is fully taxable for all implementation methods.

In the implementation routes Direct commitment and support fund there is basically no wage tax liability. In contrast to the other implementation channels, the direct commitment is processed internally in the company. This is where the tax regulations take shape complicated. There is a risk that the tax office will see things differently than the company. This is the case, for example, if the office does not recognize the strict tax requirements for the direct commitment to the GGF. The expenses for the company pension are then (sometimes also in retrospect) as hidden profit distribution viewed. Then will Back taxes due.

Detailed information on the company pension in the tax

These risks are threatened by managing directors at company pension schemes

In the case of partner-managing directors, the requirements for the pension commitment are often high in order to assert them against tax. The following case studies illustrate the pitfalls and how they can be avoided.

Start-ups have to accept waiting times

A company was founded. The company pension scheme of the managing director should have a Direct confirmation be handled. It's just not that easy to do, so that too recognized for tax purposes becomes. On the one hand, a managing director has to prove his suitability during a two-year probationary period. On the other hand, the company pension for managing directors can anyway three years after the re-establishment of a company. Otherwise there is a risk of additional tax payments. It is therefore advisable to bridge the waiting time with direct insurance, for example.

Avoid formal errors

A partner-managing director of a GmbH took care of his age with a Support fund in front. After a few years, the tax office noticed that a formal error had been made when the relief fund was set up. The contributions made were thus as hidden profit distribution treated. In total, the insured and his company should be 35,000 euros Pay taxes later.

Study insurance conditions

An employed manager became disabled after a car accident and was no longer able to work. He had one through his GmbH Direct confirmation completed and this must now be a Disability pension Afford. Although the GmbH had taken out reinsurance for such cases, it did not want to pay. Reason: You saw hers conditions for taking over the services not fulfilled.

That the supply contract does not match the Insurance conditions matches is not uncommon. That is why it is important to this to study carefullyso that you don't feel like you are in a false sense of security. One is also helpful here external advice. But it was already too late for our example company: They had to pay the monthly pension for their disabled ex-managing director in the amount of 5,300 euros themselves.

Check the contract regularly

This example shows how important it is to have your insurance contract to check regularly and to record changed personal framework conditions in good time. This includes, for example, a divorce, marriage or the birth of children:

So crashed a partner-managing director fatally at the age of 51. He left his wife and 3-year-old son behind. His direct commitment provided for a monthly pension of 2,000 euros for his family. Only was his Ex-wife as beneficiary listed in the contract. Thus, she and not his new family received the survivor's pension.

Further special features for the company pension of partner-managing directors

Compensation from a company pension is generally possible

Compensation from a company pension scheme is not permitted in accordance with the Company Pension Act. Indeed subject Shareholder-managing directors not of the social security obligation and thus also not the company pension law. So the Compensation generally possible. However, the right to severance pay may not be applied arbitrarily, as this is incompatible with the seriousness of the pension commitment. The The severance payment must be as high as the present value of the saved capital and not like the taxable partial value.

Insolvency protection of the company pension from the shareholder-managing director

As a rule, the company pension scheme is protected against insolvency by the pension insurance association. In the case of the controlling shareholder-managing director, however, bankruptcy protection is provided by the Direct confirmation only by one private law pledging of the reinsurance funds to the beneficiary possible. For example, a direct commitment is covered by a life insurance policy. This is then pledged to the GGF or to his survivors.

Reinsurance for managing directors makes sense

In the case of a direct commitment, companies are obliged to pay if an employee becomes unable to work, for example. A company in Payment difficulties bring. You can do this with reinsurance Cushion the risk. Most of the time, this takes the form of a life or pension insurance policy that is taken out for the beneficiary. If the insured event occurs (old age, disability or death), one will cover insurance the pension recipient's entitlements.

Seek professional advice to avoid pitfalls

The above case studies show: With a company pension scheme for managing directors there are many pitfalls that can significantly reduce performance or even lead to problems with the authorities. The company pension is one of them ideal form of private retirement provision for:

  • employed managing directors,
  • Shareholder-managing director
  • and controlling shareholder-managing directors,

to close the statutory pension gap shut down and the Standard of living to keep in old age.

With the right know-how, you can clear possible stumbling blocks out of the way. Most companies need help with this. “In addition, the matter is simple way too complex. Even an experienced pension advisor should consult a lawyer and tax advisor when it comes to company pension schemes for managing directors, ”says our expert Frank Heide.

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