Under current German law the income of self-employed people (including any pension benefits) is subject to seizure in the course of debt enforcement – whereas the pension benefits of employed people resulting from social security or a company pension scheme are largely protected from seizure. In the new federal law protecting old age benefits, self-employed people in Germany will be granted the same level of protection from seizure of pension benefits as is given to employed people. This will lead to a substantial improvement in protecting life insurance policies from seizure. The capital exempted from seizure will be limited in amount, depending on the age of the beneficiary. The protection will also cover annuities resulting from tax privileged old age pension schemes.
The new legislation illustrates a trend to make pension products more attractive by changing the existing legal and fiscal framework.