AUSTRIA - The Austrian second pillar is "too complex", and there are too many products and providers to be efficient, according to Christoph Krischanitz, head of actuarial consultancy arithmetica.

The range of products and providers in the market has to be made "leaner", he told a news conference in Vienna today.

However, he told IPE he was against a full consolidation of the market with just a single product on offer.

"There should be well-designed products from each section like defined contribution, defined benefit, insurance-based, etcetera, and they should all be put under the same tax framework," he said.

Krischanitz criticised the fact that there are currently "considerable differences" in tax treatment of the various products.

He said consolidation would create more demand and more competition, which, in turn, will lead to fewer providers in the market.

"At the moment, the asset volumes in the products are too small for them to be efficient and achieve good margins," he said.

For Krischanitz, on-book reserves should be put on equal footing with funded products, and every company should be free to opt to keep liquidity in the company.

"Once the second pillar has reached a certain mass," he added, "it makes sense to push for outsourcing, as the government is then able to supervise pensions."

The actuary also called for the introduction of the EET tax model in the second pillar, as a taxation of benefits "fits the demographic development of there being a growing number of beneficiaries compared with contributors in the future".

Lastly, he said he would like to see the establishment of an independent "macro-pension panel" that would take into account the interests of future, unborn generations, which Austria has "burdened" by sticking solely to the pay-as-you-go system.

In other news, the largest Austrian Pensionskasse, VBV, told its customers in a newsletter that it saw "no need yet for long-term investments in bonds from EU periphery countries".

Bernhard Köck, from the fixed income team at VBV, pointed out that the Pensionskasse would continue the strategy followed in recent months of focusing on "high-quality government bonds and solid corporate bonds".

However, he added that VBV's view on bonds from the EU periphery might change depending on the political decision on Eurobonds.