Lawsuits against insurers due to pension reductions in private pension schemes: financial experts analyze the situation

Lawsuits against insurers due to pension reductions in private pension schemes: financial experts analyze the situation

With private pension plans, it often happens that the pensions are reduced long after the contract has been concluded. Insurers are citing declining returns on the capital market. A court finds this doubtful. This can be seen from a current report by the Frankfurter Rundschau from February 14, 2024.

According to a report from www.fr.de, it is specifically about clauses in some contracts for private pension provision. This stipulates that the insurer can reduce the pension to be paid out later if “the life expectancy of the insured increases so much or the return on investments falls so much, not just temporarily, that the […] calculation bases are probably no longer sufficient to secure our pension payments in the long term”. The catch: If the situation turns around again so that the reduction is no longer justified, then the insurers no longer have to reverse the pension reduction according to the contractual agreements.

The Cologne Regional Court has already decided that such a clause is ineffective. However, according to consumer advice centers, the practice is still common. The consumer advice center is therefore taking action against four large insurance companies and is seeking a decision from the highest court. In addition, consumer advocates also encourage other affected parties to defend themselves against this practice.

Although the consumer advice centers consider the regional court's ruling to be an important milestone, they hope that more lawsuits will send a greater signal, especially if a decision is made by the Federal Court of Justice. The Riester pension has long been criticized, among other things because of high fees and low interest rates that reduce returns.

It now remains to be seen what impact the lawsuits and the regional court's ruling will have on the market and consumers. The consumer advice center's recommendation that policyholders can defend themselves against a corresponding pension reduction could mean that insurance companies have to rethink and possibly change their clauses in order to avoid legal disputes.