Austrian APK Pensionskasse has recorded top returns in the investment categories conservative (5.33%), balanced (6.90%) and dynamic (8.95%), according to the latest analysis conducted by Mercer for the third quarter of this year.
VBV Pensionskasse achieved the best returns in its defensive option with 3.33%, while Valida Pension topped the ranking for the active option with 8.61% in Q3.
The categories analysed by Mercer are split according to the exposure to equities, ranging from less than 16% for the defensive option to over 40% for the dynamic option.
The performance of the multi-employers pension funds, or überbetrieblichen Pensionskassen, stood at 5.83% in the third quarter of this year, Mercer said.
Austrian pension funds’ performance developed well over the three quarters of 2021, with a setback in September soon compensated in October, it said.
Michaela Plank, managing director at Mercer Austria, said that December will be challenging for pension funds, facing the consequences of the Omicron variant and high inflation.
“The new Omicron variant caused losses on Wall Street. Analysts assume that the downturn won’t last long, especially since there is enough liquidity,” she added.
Vorsorgekassen continue positive trend
The Austrian provident funds – Vorsorgekassen – continued the positive trend in Q3 2021 with an average performance of 2.74%. APK topped the ranking for the quarter with 3.74% among provident funds, ahead of Valida with 3.34% and BUAK Vorsorgekasse with 2.87%.
Mercer underlined the fact that Vorsorgekassen are under narrow investment limits, hindering possibilities for “alternatives investment opportunities.”
The consultancy is also advocating for an expansion of occupational pensions citing the outlook published by Statistics Austria showing that, as of this year, people aged 65 and over outnumber people aged under 20 years old.
“State pensions will continue to be an essential part of [the system] for old-age provisions, but the second and if necessary the third pillar must urgently become more important in order to have an adequate level of pension at the time of retirement,” said Plank.
Occupational pensions, however, were not part of the government’s recent eco-social tax reform proposal, Mercer noted, although sustainable investment is already integrated in the strategies of multi-employers Pensionskassen and Vorsorgekassen.Access to sustainable forms of investments is not regulated according to standards and each Pensionkasse sets its own priorities, the consultancy added.
Linking tax regime and sustainable investments is therefore an important step in order to reinforce second and third pillars and relieve the pay-as-you-go system from the burden of financing pensions.
Mercer also supports equal tax treatment of contribution of employers and employees and laying the legal basis for deferred compensation through integration into collective agreements.