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Market turbulence "harms pensions insurance market"

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  • Market turbulence "harms pensions insurance market"

AUSTRIA - Insurance group Allianz outperformed the market in life insurance and second-pillar insurance products last year despite "strong headwinds", but officials have warned turbulence could hinder pensions take-up.

While the life insurance market in Austria is stagnating on the whole, Allianz grew its premiums by 4.5% while the sale of state-subsidised third-pillar products grew 22%.

Allianz saw a growth of 28.5% to €78.1m in relation to insurance solutions for second pillar occupational pensions.

But speaking at the presentation of the insurer's annual results, Wolfram Littich, chairman of the board at Allianz, warned: "In times of market turbulences and drops in the interest curve, people want to invest their money short-term, making it difficult to sell life insurance or long-term pension products."

The Organisation of Austrian Insurers VVO noted in a press release "only a few companies" are making use of the insurance solution for their employees' retirement provision.

Aside from a Pensionskassen arrangement, the assets and liabilities can lie with an insurer in the so-called "betriebliche Kollektivversicherung" (bKV) with guaranteed returns, although returns are often lower than in a funded pension arrangement.

"In times of market turbulences, the bKV is the only way to ensure the asset value of pension promises," the VVO noted.

VVO-president Herbert Fichta wants to see tax deductions for bKVs, in order to increase growth in this sector.

He also added the changeover from a Pensionskasse to a bKV should be made easier.

"At the moment, a changeover is difficult and only possible for the whole company," Fichta explained.

"Single employees should get the ability to opt for an unbeaureaucratic switch during their active working life."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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