AUSTRIA - Pensionskassen in Austria saw their returns drop by 4.95% for the first half of this year, according to latest statistics revealed by the Austrian control bank (ÖKB).

The first quarter contributed most to this fall in returns as market turbulence generated a negative return of -4.42%.

Multi-employer Pensionskassen fared better than company pension funds as they saw lower negative returns of -4.65% compared to -6.2% for H1.

"It will be very difficult to achieve a positive result for this year - I would be glad if we make a black zero", noted Christian Böhm, head of the Austrian pension fund association FVPK, in an interview with IPE.

He added markets in the 21st century "seem to show much more volatiltiy" than before and the situation might therefore reverse quickly.

But overall, Böhm says Austrian Pensionskassen are dealing well with the crisis.

As long-term investors they are not moving completely out of equities "which would be just as detrimental but they are driving ready to brake anytime necessary", he explained.

"From talks with colleagues, I know that most new money which comes into the Pensionskassen is now put into cash positions or investments of short duration."

According to the ÖKB, figures the equity share in the collective Pensionskassen portfolios is now at 35%; the majority of assets (62%) is in bonds and almost 1.8% is in real estate.

Böhm noted he had not seen any decline in inflows to Pensionskassen because of the financial crisis.

"People and companies who have paid into a Pensionskasse for some time now know the situation from 2001/02 and we see that clients are now much more knowledgable.

"However, it might be possible that companies which had planned to set up a Pensionskasse are now waiting for a more favourable climate to do so," said Böhm.

He added it was important to explain to people they should be paying in to Pensionskassen continually and not pull out when the markets see a downturn because it might be too late to catch good returns if payments are only made again once the markets are going up.

Separate statistics compiled by the Austrian National Bank show Austrian households now have just over €14bn in Pensionskassen, which is around 3.6% of all their assets, the majority of which is still in savings books (48%) and life insurances (19%).

The rest is divided as 10% in funds, 9% in fixed-income products and 4.5% in shares.

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