Austria takes next step
Supplementary pensions are becoming of vital importance to the Austrian market, according to the Fachverband der Pensionskassen
The income of Austrian retirees is based on the three pillars: state pension, occupational pension and private (individual) pensions. Out of the total yearly benefits (approximately E30bn in 1997), about 90% is paid by the state pension system, which provides fairly generous pensions for people with lower level active income.
Further steps will be necessary to reform the state pension system in order to secure its financing. Therefore the supplementary pensions systems are becoming more and more important.
Up to the end of the 1980s, occupational pension schemes were almost completely financed through book reserves. The tax treatment of the provision to these reserves was very unfavourable (only around 50% tax deductible). As a result, occupational pensions came to a complete stand still.
Between 1988 and 1990 new labour, funding and tax laws have been passed allowing efficient funding of occupational pension schemes. The tax treatment for employers’contributions is EET for employees’ contribution it is TEE.
Since the early 1990s most of the multi-national companies operating in Austria as well as the well-known Austrian companies have transferred their pension plans to company or multi-company Pensionskassen. Since the early 1990s occupational pension schemes have started to grow again and for newly implemented schemes the Pensionkasse has become the preferred financing vehicle.
q the maximum limit for investments in equity has been increased from 30 to 40 %
q since January 1 1999 the euro has become Austria’s domestic currency
q Spezialfonds (special investment funds) and Dachfonds (funds of funds) can now also be used as investment tools by Pensionskassen
q implementation of funded occupational pension schemes for civil servants
q the implementation of funded occupational pension schemes as part of collective agreements
q a new tax regulation – TEE -for employees’ contributions
The reform of the first pillar and promotion of supplementary pension systems will remain in public discussion.
The interest of small and medium sized enterprise in establishing occupational pension schemes for their employees continues to grow as will the trend towards defined contribution schemes in parrallel to this.
The Fachverband is working with the supervisory authorities on a further relaxation of the regulations for investments along the lines of the European Commission’s Directive.
Also under discussion is the funding of the rather unique Austrian system of severance payments.
Fachverband der Pensionskassen
Managing Director:Dr F Janda
Address: Wiedner Hauptstrasse 63,
Telephone: + 43-1-501 05 4108
Facsimile: + 43-1-502 06 3544
GDP: E183bn (1997 figures)
People aged 15-60 against 60+: 3:1 (1994 figures)
Total funded retirement assets: E5bn (1998)
The Fachverband der Pensionskassen (Association of Austrian Pensionskassen) is part of the Austrian Chamber of Commerce and an organisation under public law.
All Austrian Pensionskassen, single employer as well as multi-employer funds, are members. Multi-employer and single employer Pensionskassen are subject to the same labour, funds and tax regulations.
The activities of the Fachverband are: representation of the interests of the members towards the government, the social partners and the public; providing opinions on government bills; through the Chamber of Commerce, providing opinions on the EU legislation; execution of common programmes of the Pensionskassen (eg education, press conferences, publications, etc).