AUSTRIA - Austria’s parliament has approved long-awaited reforms to the second-pillar system and declared that amendments to the country’s pensions law would not be the last.

The reform of the law governing Pensionskassen has now cleared its final hurdle, as the federal president’s signature is merely a formality.

Major amendments to the law include the creation of a ‘safety pension’ with a lower discount rate but certain guarantees for a minimum pension.

They also set out to make contribution schemes more flexible for employers, increase workers’ choices on asset allocation and improve pensioner representation on supervisory boards.

Finance minister Maria Fekter from the conservative government party ÖVP said the reform had been a “pressing issue” and would “bring improvements”, but she added that it would not be the last reform of the second pillar.

The amendment had been passed with the votes of the two government parties ÖVP and the social democratic SPÖ, which has been sceptical about funded pension schemes and non-state retirement provision.

However, Erwin Kaipel, the SPÖ’s pensions representative, was unequivocal in his support for the reform and the second pillar in general.

“The second and third pillar are worth saving, and politicians have to create the framework for that,” he said after a parliamentary debate.

Kaipel said guarantees introduced in the reform would help minimise losses, but he agreed that more steps would have to be taken in future.

Both the right-of-centre FPÖ and the Greens said the amendment had done too little to solve the “real problems” of the system.

A spokesman for the Greens compared the reform of the Pensionskassen system with a “manicure for someone suffering from multi-organ failure”.

But pension fund association FVPK welcomed the reform, highlighting the amendment to new entries into existing old contracts with discount rates of 6% or more.

In a statement, it said: “The Austrian Pensionskassen system was created in 1991 at a time of high return expectations that today can hardly be fulfilled.”

In July 2011, the financial supervisory authority FMA capped the discount rate at 3% for new contracts.

However, until the reform goes into effect - most likely from 2013 - new entries to existing schemes must be granted the same high discount rates as initially agreed when the contract was first drawn up.