Pension commitment subject to reservation is detrimental to provisions

Only under very strict conditions can a provision be recognized for a pension commitment that is subject to a reservation.

If a pension commitment contains a proviso according to which the pension entitlement or pension benefit can be reduced or withdrawn, this has a significant impact on the possibility of creating a provision for the pension commitment. The Federal Fiscal Court has ruled that, under these conditions, the formation of a pension provision is only permissible under tax law if the proviso expressly standardizes a narrowly defined circumstance recognized by labour court case law, which only permits a reduction or withdrawal of the pension entitlement or pension benefit in exceptional cases. By contrast, unrestricted reservations of revocation whose allocation is in doubt and whose recognition under labour law cannot be clearly affirmed from the outset in terms of reason and scope or whose validity and scope have not yet been submitted to the labour courts in individual cases are harmful.