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Impact Investing

IPE special report May 2018

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Consultants: AUSTRIA

The Austrian pensions market has looked promising to consultants for a number of years, but continues to show more potential than concrete business.
Last year’s extension of the deadline to 2009 for company transfers of pension commitments from the book reserve to funded schemes all but saw to that - leaving consultants to carve up pension advisory business from the remaining 17–18 multi and single employer pension funds.
Even among this small pool a number of the multi-employer funds are allied to banks and insurers, restraining the potential market even further.
As a result the number of investment advisory groups in Austria is somewhat limited.
Kurt Ebner, member of the management board at Vienna based consultant Arithmetica, says clients use advisors, albeit solely for actuarial and employee benefit work.
A large part of the work, he says, revolves around company pension fund switches from defined benefit (DB) to defined contribution (DC).
"The transfer from DB to DC plans means changes in the support level as far as the amount of pension is concerned. This is what consultants in Austria do most of the time."
Ebner also notes that changes in the legal basis for employee benefit schemes, whereby contracts are negotiated on an individual basis with each employee, means consultants are also brought in to administer and prepare the paperwork for signing by both parties. "This is our main source of business and I don’t envisage any change in this set-up in the next four or five years."
Ebner adds: "Most large Austrian companies have internal employment experts and an external actuary, so they don’t really need consultancy."
Another important constraint on the consultant market is the legal requirement to be an Austrian registered company to manage a ‘pensionskasse’. As a result foreign consultants have seen little to interest them in Austria, as Ebner remarks: "I haven’t seen one Anglo-Saxon consultant here in the last 11 years."
German consultants such as IPC, Aon Jauch & Hübener and Wyatt Gohdes Grabner have entered Austria along with Anglo-Saxon outfits Hewitt and William Mercer, although none appear to have imposed themselves on the market
According to Hans Rapatz, head of institutional clients at Vienna-based investment manager Raiffeisen, performance measurement and attribution is a hot topic for pension funds.
"DPG [Deutsche Performance_Gesellschaft] and WM are providing good performance related services to the market. Of the foreign consultants I think Frank Russell is doing well in Austria alonside some smaller domestic consultants." Hugh Wheelan

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