An employee who changes jobs and pension plans has the legal right to carry the pension entitlements accrued in the old job to the new employment. This is called value transfer. This is because the old pension insurer then transfers the value of the pension entitlements to the new pension insurer. This legal right is intended to give employees the opportunity to avoid a pension breach as much as possible. If the employee requests value transfer, pension insurers and employers have to execute the request. Since 1 January 2015, submitting this request is not subject to a deadline, but as long as the coverage ratio of either pension insurer is below 100%, a value transfer will not be executed.
Partly due to the current low level of interest rates used in insurance, the old employer may be obliged to make a (substantial) additional payment to the new pension insurer following a value transfer. The value of pension entitlements transferred by the old pension insurer is then not sufficient to acquire comparable entitlements with the new pension insurer.
In practice, this can amount to hefty sums. Especially for small employers, this obligation is a very heavy burden, also given the economic situation. That is why small employers since 1 January 2013 not to cooperate in an individual value transfer if it results in additional payment charges of more than €15,000 and more than 10% of the transfer value. This was a temporary arrangement.
The expiry of the deadline by which employees must submit value transfer requests and a further reduction in the discount rate to be used in value transfers are expected to significantly increase the burden on employers in connection with additional payments in the context of value transfers of pension entitlements. Pending a structural solution to this problem, from 1 January 2015 all employers refrain from cooperating with a value transfer with an additional payment burden of more than €15,000 and more than 10% of the transfer value. So from 2015, this will also apply to larger employers. Of course, the arrangement is not limited to the old employer, but also applies in respect of the new employer. After all, if interest ratios flip, the new employer may have to make additional payments in respect of a value transfer.