Trust Services
BMS Trust Services – Confidence and Security for Complex Structures
As a neutral and reliable partner, BMS Bond Management Support GmbH & Co. KG accepts demanding trust mandates. Drawing on many years of experience, we create transparency, legal certainty and trust among all parties involved. Together, we develop the right solution for your specific situation.
BMS Trust Services at a Glance
The BMS double trust (Contractual Trust Arrangement, CTA) is the security model provided for by law and recognised as insolvency-proof by Germany’s highest courts (Federal Labour Court [BAG], judgment of 21 October 2025 – 9 AZR 66/25, para. 13; BAG, judgment of 18 July 2013 – 6 AZR 47/12).
Trustee for Long-Term Working Time Accounts under Section 7b SGB IV
A credit balance agreement under Section 7b of the German Social Code, Book IV (SGB IV) is a contractual arrangement between employer and employee under which portions of the employee’s remuneration or working time are accumulated. Its purpose is to enable a later period of paid leave, for example for sabbaticals, parental leave or the transition into retirement.
If the credit balances are not adequately protected against insolvency, the governing officers of legal entities are personally liable, jointly and severally with the employer, pursuant to Section 7e (7) sentence 2 SGB IV.
Section 7e (2) SGB IV recognises the double trust as an effective form of insolvency protection and established market standard. The credit balance, including the employer’s share of social security contributions, is separated from the employer’s assets and transferred to a neutral trustee.
Without such externalisation, the balance remains part of the employer’s assets and shares their fate: in the event of insolvency, it becomes a practically worthless ordinary insolvency claim under Section 38 of the German Insolvency Code (InsO).
As part of its employer audit under Section 28p SGB IV, the German Pension Insurance (Deutsche Rentenversicherung) examines whether the credit balance is adequately protected against insolvency. If a deficiency is identified, the employer has two months to remedy it (Section 7e (6) SGB IV).
If the deficiency is not remedied, the credit balance agreement is deemed void ab initio: the credit balance must be dissolved, the previously deferred total social security contributions become payable retroactively, and late payment surcharges of 1% accrue for each month or part thereof (Section 24 (1) SGB IV). In addition, the unwinding entails wage tax consequences.
Trustee for Partial Retirement Credit Balances under Section 8a AltTZG
Protecting company partial retirement accounts is a statutory obligation as soon as your company has a partial retirement agreement under which credit balances are accrued.
Section 8a (1) sentence 2 of the German Partial Retirement Act (AltTZG) expressly excludes two arrangements that are widespread in practice: balance sheet provisions and intra-group guarantee obligations. Anyone who merely recognises the credit balance as a liability or relies on a letter of comfort from the parent company does not meet the statutory obligation – regardless of how creditworthy the parent company may appear.
What is required is a structure that effectively removes the assets from the reach of creditors. The BMS double-sided trust is the recognised standard model for this purpose. The Federal Labour Court has confirmed its insolvency-proof status (BAG, judgment of 21 October 2025 – 9 AZR 66/25, para. 13; BAG, judgment of 18 July 2013 – 6 AZR 47/12).
Under a double trust agreement for the insolvency protection of partial retirement credit balances, BMS assumes the administration of your employees’ credit balances and ensures that the statutory requirements are met at all times and that, in the event of insolvency, payments are made directly to the employees.
Important: Insolvency protection of the credit balances of employees in the partial retirement model is mandatory by law. The obligation to protect the credit balance arises with the very first credit entry, i.e. from the moment the protected entitlement to remuneration payable during the release phase comes into existence. This entitlement is enforceable under employment law.
Background: What happens to the credit balance if the employer files for insolvency and can no longer pay the partial retirement remuneration? The employee would merely hold an ordinary insolvency claim under Section 38 InsO – which is usually worthless.
Double Trust in Occupational Pension Schemes
In its judgment of 22 September 2020 (3 AZR 303/18), the Federal Labour Court confirmed at the highest judicial level that the double trust is insolvency-proof in the context of occupational pension schemes.
The German Pension Protection Fund (Pensions-Sicherungs-Verein, PSV) protects entitlements only up to three times the monthly reference value (Section 7 (3) of the German Occupational Pensions Act, BetrAVG), does not cover adjustments under Section 16 BetrAVG and does not protect controlling shareholder-managing directors at all (Section 17 (1) sentence 2 BetrAVG). The BMS double trust closes precisely these gaps: the assets are transferred to a neutral trustee who administers them on behalf of the company while at the same time securing them for the benefit of the pension beneficiaries.
Beyond protecting the beneficiaries, there is a beneficial balance sheet effect: if the trust assets meet the requirements for plan assets, they must be offset against the pension obligation pursuant to Section 246 (2) sentence 2 of the German Commercial Code (HGB). Only the unfunded portion of the obligation is then reported – and the equity ratio improves accordingly.
Dual-Purpose Trust in Restructurings
In economically challenging situations, the dual-purpose trust (doppelnützige Treuhand) is a proven instrument for stabilisation and restructuring.
Acting as an independent third party, we assume the role of trustee and structure the trust agreement, hold the trust assets separately from our own assets, exercise shareholder rights in accordance with the agreed instructions and report to the secured creditors on an ongoing basis – until the assets are transferred back following a successful restructuring or are realised in an orderly manner.
This creates room for manoeuvre and supports a sustainable restructuring solution.
Security Trustee under Security Pool Agreements
As security trustee, we consolidate the collateral and rights of various creditors in a security pool.
Where several banks finance the same borrower, their collateral competes – resulting in disputes over ranking, duplicate collateralisation and deadlocked enforcement decisions.
The security pool resolves this problem by consolidating the collateral with BMS as neutral trustee, which holds it in trust for the pool members and manages its realisation on a uniform basis.
We structure the allocation, hold the collateral, monitor the agreed coverage limits and distribute realisation proceeds in accordance with the allocation key set out in the pool agreement.
In the borrower’s insolvency, the pooled collateral grants the pool members rights to separate satisfaction (Absonderungsrechte, Section 51 no. 1 InsO). We file and enforce these claims vis-à-vis the insolvency administrator on a consolidated basis.
Our expertise ensures proper administration and professional distribution in line with the contractual arrangements.
Find out how the statutory insolvency protection of credit balances is implemented with legal certainty:
Insolvency protection of long-term working time accounts under Section 7e SGB IV – read the article in the BMS digital magazine.
Information brochure on the insolvency protection of partial retirement credit balances under Section 8a AltTZG – download.