AUSTRIA - Austrian pension expert Johannes Rudda would like to see the federal state put money into Pensionskassen with employers being another possible source for financial aid.

Speaking at the presentation of his new guidebook on the Austrian pension and health care system, the legal adviser to the social insurances’ umbrella organisation, said  it was up to the state to help the ailing Pensionskassen.

The Pensionskassen had negative returns of 13% on average last year, which means some pensioners will receive lower benefit payments. (see earlier IPE-story: Pensionskassen to be reformed)

“Half of the money to aid pensioners should come from the state and the other half from the companies,” Rudda said.

He added that employers should increase their contributions to Pensionskassen as it is their human capital they are supporting.

For the third pillar, Rudda commented that the savings book was still “a primitive but safe” way to put aside money for retirement.

Meanwhile, the association of Austrian insurers once again urged the government to allow an easier transfer from Pensionskassen to the so-called corporate collective insurance (“Betriebliche Kollektivversicherung”), an insurance-based pension vehicle, which offers guaranteed returns. Insurance companies have continuously demanded tax incentives to grow this part of the second pillar.

However, Pensionskassen argue the guarantee comes at a cost. (see earlier IPE-article: VBV wants variable calculation rate).

Last year’s return figures for the Pensionskassen have been confirmed by the Austrian control bank. It calculated an average return of -12.94%, with multi-employer funds losing -11.82% and corporate funds -17.69%.

The average annualised return over five years has slumped to 2.29% compared to 3.73% in September and 4.84% in June last year.

The average equity exposure of Pensionskassen stood at 24.98% at year-end 2008 compared to 35.12% in March.

The share of bonds in portfolios has grown significantly from 62.83% to 72.73%, as has the proportion of real estate: from 1.97% to 2.28%. (see earlier IPE-article: Austrian pension funds lose 8.4%).