Concept and legal classification of the compensation pension
Die Compensation pension is a term defined in social law and civil service law, encompassing different objectives and legal bases. In principle, the compensation pension describes financial compensation for securing the livelihood of certain groups of people who, under the relevant legal requirements, acquire a right to this benefit. It is often paid as an additional, subsidiary benefit when other statutory entitlements, such as pensions or retirement allowances, are not paid or are paid only in reduced amounts.
Historical development and purpose
The introduction of the compensation pension occurred against the backdrop of social and political upheavals, particularly in connection with the Equalisation of Burdens Act (LAG) as well as statutory regulations for the welfare of war victims and other special laws. The aim is to create compensation for disadvantages experienced by groups who have suffered a reduction in their security of provision due to government measures or war-related events.
Legal bases
The regulations on the compensation pension are primarily found in the following laws:
- Equalisation of Burdens Act (LAG)
- Foreign Pensions Act (FRG)
- Federal Pensions Act (BVG)
- Civil Service Pensions Act (BeamtVG)
Compensation pension under the Equalisation of Burdens Act (LAG)
Entitled persons
A claim to a compensation pension under the LAG exists in particular for persons harmed within the meaning of Sections 230 ff. LAG, provided they suffered substantial losses of property due to expulsion, expropriation or war effects in connection with the Second World War and have therefore been significantly impaired in their economic existence.
Requirements
A prerequisite for granting is the determination of a so-called primary damage, for example to real estate or business damages. It is also checked whether the injured person has established a new livelihood or whether there are earnings from employment, pensions or other social benefits. The amount of the compensation pension is calculated taking into account other income.
Calculation and amount
The specific calculation is based on the eligible damage incurred and the respective degree of neediness. The law stipulates allowances, lump sums, and the modalities for the calculation of further income. Special rules exist for married beneficiaries as well as for minor and adult children living in the household.
Compensation pension under the Foreign Pensions Act (FRG)
The FRG provides for a compensation pension for persons whose periods of social insurance or pension entitlements have lapsed due to expulsions or political changes. Here, the compensation pension serves as a supplementary benefit for a too low or missing old-age provision.
Compensation pension under the Federal Pensions Act (BVG) and other pension laws
War victims and their surviving dependents
The BVG grants compensation pensions to eligible war victims, those injured in military service or their surviving dependents, if certain basic conditions stipulated by law are met. The compensation pension is granted in addition to other pension benefits as compensation for disadvantages, provided the relevant income limits are not exceeded.
Exclusion and restriction grounds
The respective regulations stipulate circumstances leading to exclusion or restriction. For example, the compensation pension ceases in the case of residence outside Germany or in the event of significant additional income. Also regulated are grounds for reclaiming benefits in cases of incorrect information or subsequently determined lack of entitlement.
Compensation pension for civil servants and pension recipients
According to civil service law provisions, especially the Civil Service Pensions Act, a compensation pension may be granted under strict conditions, usually to secure a minimum livelihood in old age, for example when the inclusion of foreign pension elements results in a gap in provision.
Calculation and crediting of other benefits
A particular aspect is the crediting of other pension and retirement benefits against the compensation pension to avoid double payments in the case of other secured provision. Consequently, the compensation pension is generally paid only as a secondary benefit.
Process for application and submission of proof
Application and evidence procedure
The compensation pension must always be formally applied for at the responsible authority. The application must be accompanied by proof of the relevant loss of assets, the degree of reduced earning capacity, income situation, and, where applicable, further specific documents. The administrative procedure is fundamentally governed by the Social Code (SGB X) and the specific procedural provisions of the respective special law.
Review and recovery
Authorities are obliged to regularly review the actual circumstances. If compensation pensions are paid unjustly, these may be reclaimed in accordance with the administrative procedure laws.
Tax and social security treatment
Tax liability
The compensation pension is subject to income tax in certain cases, provided it is paid as a recurring benefit and no explicit tax exemption is provided in the Income Tax Act (EStG).
Social security status
In most cases, the compensation pension is not offset against social security benefit entitlements (for example, basic provision in old age). Exceptions exist where there are multiple overlapping entitlements.
Compensation pension in the international context
The compensation pension holds a special position under European and international law. Within the framework of restitution and compensation regulations for persons injured abroad, bilateral agreements may contain special provisions regarding the crediting and granting of compensation pensions.
Key case law
German courts, particularly the Federal Social Court and the Federal Court of Justice, have issued numerous landmark decisions on the interpretation of statutory conditions, the crediting of income, and the recovery of unlawfully paid compensation pensions. The relevant judgments must be considered in the context of the respective area of application.
Literature and further sources
For in-depth research, it is particularly recommended to consult specialist literature on social law, public law commentaries on the Equalisation of Burdens Act, and major publications on the history of the welfare state and pension systems.
Note: The compensation pension is a complex legal concept, the entitlement to which and scope are highly dependent on the respective legal area. The concrete requirements, the amount and offsetting, as well as the tax and social security implications, are always determined by the individual case and the relevant statutory provision. For precise information, consultation of the relevant legal texts and academic commentaries is essential.
Frequently asked questions
What requirements must be met to be entitled to a compensation pension?
For an entitlement to a compensation pension to exist, statutory requirements must be met. First, it is relevant within which legal framework the compensation pension is claimed, as regulations may differ, for example under the War Victims Welfare Act (KOV), the Soldiers’ Pensions Act (SVG), or civil service pensions law. Typically, a compensation pension is granted as a special compensation benefit for persons whose earning capacity has been significantly and permanently reduced as a result of a work accident, military injury, or similar causes. It is also examined whether a reduction in earning capacity (MdE) has been medically certified at a certain percentage—usually at least 50%—and has existed for at least a certain period. Another key criterion is economic necessity, which is determined by income and asset checks. Certain exemption limits must not be exceeded in this regard. Finally, timely and properly submitted applications and cooperation in medical or administrative reviews are usually required.
How is the compensation pension calculated legally?
The calculation of the compensation pension is regulated in detail in the respective special law, such as the Federal Pensions Act (BVG) or the Soldiers’ Pensions Act. The basis is always a percentage reduction in earning capacity (MdE) or occupational disability, determined through medical and legal assessment. The assessment amount is then derived from statutory fixed amounts, which are graded according to the degree of injury and regularly adjusted. Additional income, such as other pensions, retirement payments or earnings from employment, must be taken into account. If certain income thresholds are exceeded, the compensation pension is proportionally reduced or ceases to apply. The respective law defines concrete exemption limits; amounts exceeding these limits are offset in part or in full, depending on the regulation.
To what extent is the compensation pension governed by social law, and what must be considered regarding welfare benefits?
The compensation pension is a benefit under social law and thus falls under public law. It is primarily designed as a social compensation benefit and aims to offset economic disadvantages resulting from sovereign injury. As the compensation pension is in most cases not paid regardless of need, it may be taken into account for other welfare benefits such as basic security, care allowance or housing benefit. Depending on the benefit provider and the specific welfare benefit, there may be special crediting rules. In addition, the compensation pension is subject to the principle of subsidiarity in social law: your own resources take precedence, then the compensation pension; supplementary welfare benefits follow only afterwards.
Which statutory provisions govern the adjustment and review of the compensation pension?
The amount of the compensation pension is regularly reviewed and may be adjusted by law to economic conditions. The relevant sections of the BVG, SVG, or KOV stipulate at what intervals (usually annually) and according to what criteria (e.g., adjustment to pension increases or cost of living) the compensation pension is to be recalculated. Changes in the economic or health situation of the beneficiary must be reported immediately and may lead to recalculations. The review is often initiated ex officio, but also as a result of notifications from the beneficiary.
What are the legal consequences of failing to report changes in your financial, income, or health situation?
Anyone receiving a compensation pension who does not immediately notify changes in relevant circumstances—for example, increased income, receipt of further social benefits or improvement in health—acts unlawfully. According to statutory regulations in § 60 SGB I, there is a comprehensive duty to cooperate. If this notification is omitted, it may result in the recovery of unduly paid amounts, suspension of the benefit and potentially criminal or administrative penalties, in particular for fraud under § 263 StGB or benefit fraud. The providers of the compensation pension are required to reclaim overpaid amounts retroactively and to initiate the appropriate procedures.
Can the compensation pension be garnished or inherited?
In general, the compensation pension is among the non-attachable social benefits, if explicitly regulated by law. According to the Code of Civil Procedure (§ 850 ZPO), pensions and social benefits are fundamentally only subject to limited or no garnishment. Compensation pensions are generally strictly personal claims and not inheritable; the entitlement lapses at the moment of the beneficiary’s death. Only in exceptional cases, such as outstanding back payments from before the death, may heirs claim payments; however, this is strictly limited and specifically regulated by law.
What legal remedies are available in the event of rejection or reduction of a compensation pension?
If an application for a compensation pension is rejected or an ongoing benefit is reduced, there is the possibility under the Social Code to file an objection within one month. The objection must be made in writing and in proper form. If the objection is not remedied, the judicial route before the social court may be pursued. An administrative court procedure takes place there, in which the legal bases and factual requirements are comprehensively examined. The legislator thus grants legal protection to safeguard the justified claims of the parties concerned. In certain cases, temporary legal protection may also be granted by way of a preliminary injunction to avert imminent existential hardship.
