AUSTRIA - New strategies and reforms are needed in the Austrian pensionskassen system, according to banking officials, yet politicians have claimed the first pillar is good enough even when young Austrians disagree.
Pensionskassen are needed to ensure a certain standard of living in retirement as "the first pillar alone is not enough", according to Gerhard Rehor, director at an Austrian Raiffeisen Landesbank.
"The financial crisis has not changed that fact," he added.
But he noted the second pillar needed to get rid of its "teething problems" like too high calculation rates which were granted at the start of Pensionskassen in the 1990s or too little individual choice of portfolios and pension vehicle and welcomed imminent reforms. (See earlier IPE story: Austrian pension fund doubts value of reform)
He also pointed out pensionskassen will need to change their investment strategy in the wake of the crisis.
"The 10-year magic of equities is gone," he said.
Rehor is convinced that the old principle of "buy and hold" strategies rendering a long-term outperformance over risk-free investments no longer holds.
He argued there will more active management in the equity portfolios of pensionskassen, with a look towards future global trends rather than the past performance of equities.
As for the first pillar of the Austrian pension system, he said he expects a change to the retirement age to happen in the near future, without giving details.
Elswehere, Austrian retiree representatives have criticised the OECD for its latest analysis of state pension systems in Europe and accused it of exaggerating the amount the Austrian government is spending on the first pillar.
Former politicians and now head of a pensioners association, Karl Blecha, also criticised finance minister Josef Pröll for maintaining that the second and third pillar are needed as supplementary systems to the state pension.
The heavy losses suffered by pension funds worldwide during the financial crisis were proof that funded retirement systems "were not to be recommended", Blecha said.
He, as well as some politicians, remain convinced that the first pillar in Austria is sustainable over the long-term.
However, according to a recent poll young Austrians do not believe this: Out of 1,000 young people between the ages 15 to 30 only 7% believe that the state pension system is fully secure and will still be in place once they retire.
Over half of the people polled are convinced that the income from their state pension alone might be "problematic".
According to the poll, almost 58% stated they were already saving for their retirement, but savings books and building savings contracts remain the savings vehicles of their choice.
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