Further consolidation in Austria’s second-pillar pension system could lead to an “oligopoly”, finance minister Hans Jörg Schelling has warned.

Speaking at the 25th anniversary celebration of Austrian Pensionskassen, he argued that competition was vital in the second pillar and “must be allowed”.

“There must be no further consolidation that might hinder competition,” he told IPE.

Since the law that established Pensionskassen came into effect in July 1990, many company pension plans in Austria have been outsourced to multi-employer funds.

A year ago, figures released by supervisory authority FMA showed that the three largest Austrian Pensionskassen accounted for 73% of the market.

Overall, the number of company and multi-employer pension funds has now come down to 14, with the Victoria Volksbanken Pensionskasse currently still on the market.

A decision on that sale is expected in the coming weeks.

Schelling also called on the pensions industry to “offer more attractive products” but added that he was aware Pensionskassen were “restricted by a tight regulatory framework” set by the FMA and European regulators.

Speaking with IPE, the minister said “people needed to have trust in the system” and might need “more flexibility” regarding products.

Schelling called for a “combined product” as a hybrid between a Pensionskasse and an insurance-based “Betriebliche Kollektivversicherung”, offered in the second pillar by various Austrian insurers.

He said he was convinced that only a combination of solutions would help increase participation in the second pillar and indirectly waived the industry’s demand for tax incentives such as the full introduction of the EET-model in Austria.

“Currently, there is no room for tax incentives, but, over the next 25 years, the topic will certainly come up again,” he told IPE.