Austria's pension association rounds on risk pool limits
AUSTRIA - The limit of 10,000 members for a single pension pool within a Pensionskasse is too high, says Andreas Zakostelsky, head of the Austrian pension fund association FVPK.
After two years of negotiations a revised version of the Pensionskassen law published this month increased the limit for separate pension pools for individual companies within a Pensionskasse from 1,000 to 10,000 members.
However, Zakostelsky was critical of the change at a press conference in Vienna."This limit is too high," he told journalists..
The limit would mean that smaller multi-employer Pensionskassen would only be able to offer two or three different so-called investment and risk communities (Veranlagungs- und Risikogemeinschaften, VRGs) - in which companies can have a say on risk and asset allocation - which might leave the providers less competitive.
Zakostelsky stressed that the pension fund association would urge in its consultation submission that the upper lit should be lowered "significantly", but said a concrete number would still have to be discussed.
In general, he noted the FVPK was "very happy" with the amendment as it made the second pillar "more attractive" both to individual members - by offering a wider array of choices - and companies, especially SMEs, offered more flexibility in their contribution arrangements.
"This is a real chance for the 80% of Austrian employees who do not have a second pillar pension so far to get one in the near future," Zakostelsky said.
He also welcomed the change to the bond investment rules which will now allow investment grade corporate bonds to be marked as held-to-maturity at purchase while so far this valuation method was only applicable to investment grade government bonds.