Less than half of the almost €7.6bn in defined benefit obligations (DBO) reported by the 37 companies listed in the prime segment of the Austrian stock exchange (ATX) are funded via a Pensionskasse or insurance-based Betriebliche Kollektivversicherung (BKV), data collected by arithmetica shows.

According to the actuarial consultancy’s managing director, Christoph Krischanitz, this will not change any time soon.

For all domestic companies, both listed and unlisted, he estimates that approximately €20bn in unfunded pension promises are still on the books.

“This Austrian situation, where a lot of the DBO remains unfunded, shows the limits of the IORP Directive,” Krischanitz said.

He pointed out that these funds remained outside the regulatory framework, as only an intermediate financial service provider – i.e. a pension fund – can be regulated, but the supervisory body cannot control the pension promise an employer made directly to its employees.

“And the more regulatory requirements you impose on pension funds, the more expensive and less likely further outsourcings are going to be,” Krischanitz said.

In Austria, he “does not see any major outsourcings ahead”, mainly because it costs a lot of liquidity, especially now with lower discount rates being applied.

In 2013, the spread of the discount rates applied by companies “tightened”, with the lowest remaining at around 2%, but the highest dropping from 6.75% in 2012 to 4.9% in 2013.

Further, a lot of the on-book reserves are earmarked for pensioners, which cannot be outsourced to an external provider in bulk, but would have to be approached individually.

Overall, around 35% of the DBO in the ATX prime is funded, with companies in the industry segment showing the highest funding level at just under 50% on average.

But Krischanitz stressed that most companies had enough capital to finance the pension promises, which made up less than 10% of capital in all companies.

For many, he added, it is even below 5%.