Black model partial retirement
Partial retirement has come to play a key role in the economy as a personal early retirement model, enabling older workers to move into retirement in a socially-acceptable manner.
The so-called ‘block model’ is the most widely used version of partial retirement schemes. It breaks down early retirement into two equal phases: the working phase and the release phase. During the working phase, employees contribute 100 per cent of their working hours and are paid 50 per cent of their full time salary. To avoid employees losing out too much financially, employers are required to pay additional ‘top-up contributions’: one top-up on statutory pension contributions and one on regular monthly pay.
After half the partial retirement period the employer and employee agreed on, the employee is released from work. In this release phase, the employee receives the 50 per cent pay component they were not paid while they were working, plus current top-ups as before.
Your benefits at a glance:
- Helps to manage your company’s age structure actively
- Helps motivate older staff
- Top-ups are exempt from taxes and social security contributions
DekaBank can advise you on introducing insolvency protection for partial retirement agreements on the block model at your company. This involves investing in DekaBank Group investment funds. A range of models for insolvency protection and managing partial retirement models are available. DekaBank can assist you in selecting the right model for you to suit your company’s situation (number of staff involved, assets, accounting rules).
With block model partial retirement schemes, the difference between working fulltime and being paid 50 per cent means employers have financial obligations vis-à-vis their employees. These obligations accumulate gradually while staff are working and start reducing again when they are released. Employers are bound by law to protect their employees’ entitlements under partial retirement schemes on the block model against the possibility of the company becoming insolvent. The models DekaBank offers for insolvency protection for block model partial retirement schemes offers attractive ways of meeting the statutory requirements. A number of versions are available.
With the pledged model, a DekaBank custodial account is opened in the employer’s name. Assets to be protected against insolvency are invested regularly in DekaBank Group investment funds, and the entire balance of the DekaBank custodial account is pledged in the employee’s favour. When an employee is released, if the employee’s entitlements reduce once more, the investment units are released on a step-by-step basis by the employee and sold at regular intervals in favour of the employer. This ensures that, in the case of insolvency, the fund units in the DekaBank custodial account are available to satisfy the employee’s entitlements.
Alternatively, you can use the assignment model in connection with the Deka-ZeitDepot Online to protect against insolvency and manage assets under block model partial retirement schemes (see section on ‘working time accounts’). These could be particularly attractive if your company has a large number of partial retirement schemes.
Your local savings banks or landesbank can provide you with expert advice on investing equivalent values for insolvency protection. DekaBank Group’s product portfolio offers a wide range of investment options for short- to medium-term investment timeframes.
Whichever insolvency protection model you choose, DekaBank offers a comprehensive range of services covering all the processes and forms required for insolvency protection and administering assets from block model partial retirement schemes. Our service modules include:
- Selecting between different security-oriented investment options (funds without issue mark-up possible)
- Regular statements every 30th June
- Comprehensive custodian accounts every 31st December
- Administrating assets in the event of insolvency