Partners-Managing Directors of corporations, in Germany in particular of GmbHs, are generally not subject to any statutory pension insurance obligation. A frequent (alternative) path therefore leads to the so-called pension commitment, in which the GmbH guarantees the Managing Director or the Managing Director a lifelong pension. However, in order for this pension commitment not to trigger a hidden profit distribution (vGA), it must stand on contractually secure feet.
Principle and Benefits of Pension Commitment
Behind the pension commitment is a form of occupational pension scheme, which offers tax advantages, especially in direct comparison with a purely private asset accumulation. Because it enables the GmbH to pay its managing director – who is often also a shareholder – a one-time, lifelong or temporary pension service beyond his departure from the company.
The possibilities of protection are manifold. In addition to retirement provision, the risks
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.