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Austrian supervisor demands more say in pension fund investments

AUSTRIA - The FMA, Austria’s pensions supervisory body, has criticised a draft amendment to the law governing the country’s Pensionskassen, arguing that proposals for a so-called ‘safety pension’ would require stricter investment regulations.

The long-expected draft amendment, published in late 2011, introduced, among other things, a ‘safety pension’, or Sicherheitspensions - with a low-risk profile and guarantees.

In its response to the draft, the FMA said it should be given the right to set investment limits for the new safety pension in order to ensure its low-risk profile.

It did not provide details on asset classes or investment caps, but it did say the regulations “should be stricter” than those already in place for Pensionskassen, and that it should spell out permissible asset classes, investment caps and qualitative requirements.

It said that, in principle, it welcomed new, higher limits on members to any portfolio offered by a Pensionskasse, as this would allow economies of scale. But it warned that this might prove “an existential risk” for smaller, multi-employer pension funds.

The FMA therefore recommended not extending the minimum number of members to safety pension portfolios, and allowing pension funds to offer only one to limit administrative costs.

The supervisory body also wants to see new mortality tables introduced alongside the lower discount rate in the safety pension.

Finally, it argued that safety pensions should not be established within existing portfolios in a Pensionskasse, but as separate portfolios to ensure transparency.

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