The number of single employer pension schemes in Austria will double in the next three years following legislation to simplify their implementation.
From August 1 companies seeking to set up such a scheme will no longer have to undergo the laborious routine of seeking approval from the Minister of Social Affairs via the Minister of Financial Affairs, a system which had previously proved extremely time - consuming.
Fritz Janda, secretary of the Austrian Pension Funds Association, believes the chance for employers and workers councils to approve their own schemes will see the number of single employer schemes in the association rise from 10 to 20.
Companies such as Siemens are already in the process of setting up single employer schemes. However, Austrian legislation stipulates that a company must have over 1,000 members to do this, so we are not going to see an explosion in their number."
Wolfram Arnulf, business manager at Siemen's electronic branch, Austria, believes the new legislation alongside a favourable tax regime is prompting large companies to follow their lead.
"The adoption of a pension fund scheme will reduce the long term future cost of our benefits system by removing it from the balance sheet into investment."
The Austrian tax system supports this move, as contributions to a pension fund are not taxed but pay a minimal insurance premium. Then, when the employee receives a pension, only income tax is paid on it. "The new legislation we are sure will prompt more and more companies to move to their own pension fund provision," he says.
The Siemens pension scheme is being proposed to the 9,500 employees, who currently make up the company's Austrian workforce. Although not mandatory, the system is expected to raise total assets of Sch4.5bn ($360m) through employer contributions of 1.1% (6% for management) of employee salary. Hugh Wheelan"