EUROPE – The Austrian pension fund association (FVPK) has demanded an exemption from the controversial financial transaction tax (FTT), notwithstanding its government's pledge of support.

Earlier this month, the European Commission confirmed that pension funds would fall under the scope of the new tax, but argued that its impact on schemes would be "extremely limited".

However, Andreas Zakostelsky, chairman at the FVPK, rejected this claim and said local pension funds should be exempt, highlighting their "social role".

He said the tax would have an impact on the pensions of "many thousands of current and future members, especially those on a lower income".

He added: "Pensionskassen have to invest part of their assets on the financial markets and in securities in order to achieve the discount rate agreed on with their clients."

Last week, the Dutch government withdrew its support for the so-called Tobin tax because it included pension funds.

At the time, the Dutch Pensions Federation said the government's move was a "sensible decision", as the new proposals would be "disastrous" for pension fund costs, causing a "significant" decrease of pensions.

Under the details set by the Commission, an FTT of 0.1% will be applied to shares and bonds, units of collective investment funds, money market instruments, repurchase agreements and securities lending agreements, while a tax of 0.01% will be charged on derivatives.

So far, 11 European countries, including Germany, France, Spain, Italy and Austria, have said they support the tax, resulting in the EU member states triggering a process of 'enhanced cooperation' – whereby policy proposals are drafted jointly.