AUSTRIA – An advocacy group representing insured members at Austrian pension funds (Pensionskassen) has attacked the schemes for grossly overstating current and future benefits and appealed to the government for help. According to Pekabe, around one-third of the contracts that employees have with the Pensionskassen date back to 2000, or the first year of the equity market crash. Although the Pensionskassen envisaged a maximum annual return of 7.5% in these contracts, they achieved just 1.9% in 2000 and posted negative returns for 2001 (-1.6%) and 2002 (-6.3%). Indeed, the poor performance of the Pensionskassen – caused by the equity market decline – prompted them to lower their maximum annual return to 5.5% in 2004. Meanwhile, their returns recovered to around 7% in 2003 and 2004 before rising to 11.4% last year. Pekabe said the upshot of all this was that both current retirees – who number 50,000 of the total 400,000 insured – and future ones would get far less than was promised. By 2025, the group calculated that retirees would get 25% less than what the Pensionskassen had promised. “In view of these facts, our members would get higher returns with simple money-market accounts,” Maximilian Arbesser, the head of Pekabe, told the newspaper Die Presse. Pekabe also fired a broadside at Austrian employers, which it said were happy to outsource their pensions to the schemes “in the hopes of paying less amid promised high returns”. Finally, Pekabe said almost 400 of their members had filed legal complaints aimed at getting the government to do something about the claimed cuts in benefits. However, the Austrian finance ministry responded that it saw no reason to intervene. Austrian Pensionskassen lobby FVPK, which represents 21 schemes, also disputed Pekabe’s calculations. Said FVPK managing director Fritz Janda: “While it’s true that several bigger firms outsourced their corporate pensions to Pensionskassen at an unfortunate time for the markets, we don’t see how they arrive at a cut of 25% in pension benefits by 2025. At most it will be 10%.” Janda did, however, accept Pekabe’s assertion that around one-third of current Pensionskassen contracts promised a maximum annual return of 7.5%. However, he said employers had partially made up for the schemes’ past performance by injecting more money. Janda also warned that if the government intervened to amend the contracts, which he called a “voluntary social service”, it might negatively impact on employers’ willingness to provide pensions.