AUSTRIA – A new study from international consultant Mercer has found deficits in both the transparency and investment strategy of six Austrian pension funds, known as Pensionskassen.
In the sample, the study said only two of the funds were transparent enough regarding pension entitlements while two of them did not adequately warn their insured about possible investment losses.
Moreover, not all Pensionskassen were completely transparent in disclosing other costs, like those related to administration, the study said.
Mercer reiterated its position that Austrian Pensionskassen were overexposed to fixed income, noting that the share of bonds in their portfolios totalled more than 60%.
“We’re of the opinion that the potential for equities for Pensionskassen has not been fully realised. But of course, the optimal asset allocation for each fund must be arrived at by doing a proper asset-liability study. This is still rather rare in Austria,” Michaela Plank, an associate at Mercer’s Vienna office, told IPE.
On the other hand, the study emphasised that, of the sample, Pensionskassen run by German insurers Victoria and Allianz as well as the €4bn multi-employer scheme VBV were most transparent.
Christian Böhm, head of the Austrian pension fund association (FVPK), dismissed the study’s findings.
“Many insured are not too bothered about knowing every little cost that is incurred as many of these are picked by their employers. By inundating the insured with information, you run the risk of their getting lost,” Böhm told the Vienna daily Die Presse.
Böhm also retorted that it was simply false to suggest that the investment strategy of Austrian Pensionskassen was too conservative.
“For some we are too conservative and for others we are too risky. We have even been criticised for not investing in Turkish stocks,” he said.
“The fact is though that our equity portion is higher than that of Swiss Pensionskassen. Also, if a client wants a more return-oriented approach, he can lobby his fund to raise its equity exposure even further,” Böhm added.
Böhm’s association represents 21 Austrian Pensionskassen, which in turn cover 20% of Austria’s workforce and have €11.5bn in assets.