AUSTRIA - The Victoria-Volksbanken Pensionskasse is not convinced that making it easier for people to switch between several pension vehicles will help the second pillar, IPE has learnt.
A reform commission on pensionskassen has been proposed in a bid to facilitate movement of individuals between Pensionskassen and the other Austrian second-pillar vehicle, the insurance-based Betriebliche Kollektivversicherung (BKV). (See earlier IPE article: Austrian pensions system 'riskiest' by comparison)
However, Martin Zinsler, head of sales at the €500m Victoria-Volksbanken Pensionskasse, doubts the usefulness of this reform step.
"We don't necessarily need pensions to be more easily transferable between the two systems because when given enough information people can make a decision on whether they want guarantees or rather go for possible higher returns," said Zinsler.
Instead, he argued it would not be wise to transfer capital from one system to the other as some of the assets built up in the pensionskasse would then have to be used to pay for the guarantee granted by the BKV.
He suggested it might make more sense to encourage people to start paying into a BKV from a certain age in a bid to improve the growth of their pension assets but leave the to-date accumulated assets in a pensionskasse.
He noted a new client of Victoria-Volksbanken, which offers both pensionskassen and BKV solutions, is planning to implement a pension plan which allows each employer to choose between the two options.
But only a few companies in Austria have so far gone for this model
Victoria-Volksbanken is part of the International Group Program (IGP) which was set up in the 1960s to help international companies to pool their insurance and pension obligations and comply with local regulations.
The insurance/banking company represents both international companies working within Austria as well as Austrian companies with subsidiaries outside the country.
Zinsler claimed many Austrian companies were still quite ignorant towards the concept of offering retirement and other benefits as part of the salary.
"They are paying higher wages rather than setting up a pension scheme. But they often overlook that in many countries they do not have a choice but to offer benefits if they want to compete," explained Zinsler
He also said it often goes unnoticed that paying into a pension fund could help a company to lower the employee-related taxes and costs, and therefore help the company in the process.
Just 20% of the Austrian workforce is thought to be in some kind of occupational pension scheme.
Zinsler is also convinced that mergers and acquisitions will play a larger role in the future of pensions as he believes many companies are bound to be sold and the future of their pension schemes is yet undecided.
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