Austrian multi-employer pension funds APK and Bonus, the latter owned by Zürich and Generali, have ranked among the best schemes in terms of investment strategies in 2023 in research conducted by Mercer.
According to the consultancy, Bonus Pensionskasse ranked first among pension funds for its defensive (5.37%), active (8.09%) and dynamic (8.82%) strategies.
APK Pensionskasse, instead, has snatched up the best performance for its conservative (7.11%) and balanced (7.66%) strategies.
Michaela Plank, managing director of Mercer Austria, has described 2023 as a “very good year” for investments and returns, compared with 2022, that helped to beef up reserves and fend off market fluctuations.
Over a nine-year period (2014 to 2023), APK took the top spot for its conservative (3.47%), balanced (3.72%) and dynamic (4.27%) strategies, according to Mercer’s analysis.
VBV Pensionskasse achieved the best 10-year performance with its defensive strategy (2.91%) and Bonus with its active strategy (3.35%).
Mercer noted that pension funds with a higher exposure to equities, and taking on more risk, recorded better returns during the last 10 years. Managing assets based on a life-cycle model benefits mostly younger generations willing to take risks in capital markets.
Mercer suggested to extend a life-cycle model to pensioners.
“Especially in the current market, increasing flexibility in pension funds’ investments is recommended. Some pensioners still have a long investment horizon [ahead of them], and it should therefore be possible to let them decide about their investment,” Plank said.
Among provident funds, Valida achieved the best performance through its defensive strategy, followed by the Lower Austrian Provident Fund (Niederösterreichische Vorsorgekasse).
On average, provident funds achieved 4.14% in returns through defensive strategies, and 7.88% through conservative strategies. Mercer only looked at APK Vorsorgekasse to assess the performance of conservative strategies.
Over a 10-year period, VBV posted a 1.81% return, ahead of BUAK at 1.74%, and APK Vorsorgekasse at 1.60%, according to Mercer.
Provident funds follow low risk investment strategies as they have to pay guarantees on contributions.
“Expanding the threshold for investments would result in significantly higher returns, against the same risk, and [it is a measure that] could be implemented relatively quickly,” Plank said.
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