AUSTRIA - Kurt Bednar, occupational pension expert with international consultancy Funk, is sceptical about the recently implemented reform commission for Austria's pensionskassen system and claims discussions are unlikely to come to any useful conclusion.
"It is too much focused on the past and not so much on the future," he told journalists in Vienna today.
The pension reform commission has been set up to discuss ways to reform the Pensionskassen system which has seen assets slump by 13% last year. (See earlier IPE story: Austrian funds average 13% loss)
Among the things to be discussed are larger buffers for pensionskassen as well as minimum return guarantees.
"I don't know why they are bringing up the old issue of minimum guarantees in the pensionskassensystem again as it is clear that, when introduced four years ago, clients did not want them," said Bednar.
He stressed the second pillar in Austria already has access to a guaranteed pension option with the insurance-based Betriebliche Kollektivversicherungen (BVK). (See earlier IPE article: Pension guarantee against law, says supervisor)
Bednar has instead urged employers to inform their staff about this other possibilities, and suggested they consider a contributions holiday from the pensionskasse but make payments to a BVK at least until markets have recovered again.
"What the system needs is flexibility. People should eventually be able to decide individually how much equity exposure they want and whether they want guarantees or would rather bet on the markets," argued Bednar, who referred not only to the choice between BVK and pensionskasse but noted the lifecycle model in pensionskassen has yet to gain real acceptance.
"If you give people a choice of three portfolios which do not differ that fundamentally they will choose the middle one," he explained.
He also suggested the current problem of old contracts with too high calculation rates might be solved if the state offered tax incentives to employers for putting more money into struggling funds
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