Austria’s parliamentary labour and social affairs committee has paved the way for a final vote on a comprehensive reform of the country’s occupational pension system.
The Sozialausschuss approved a series of changes to company pension schemes on 9 September as part of a legislative package called “working in old age”.
Under the proposed rules, employees would be able to invest company contributions in investment pools (Vorsorge-Veranlagungsgemeinschaft) established within provident funds (Vorsorgekassen).
Provident funds would invest the assets without the guarantees currently required, allowing them to take on greater investment risk in pursuit of higher returns. Provident funds would be required to offer the investment pools as a second product alongside the standard severance pay investment model, according to the committee.
Access to capital accumulated during working life would remain restricted to cases of hardship, such as long-term unemployment or serious illness.
A further key reform would allow employees to transfer accrued severance payments into a pension fund (Pensionskasse) free of charge through a general pension fund contract (Generalpensionskassenvertrag).
Currently, such transfers are only possible where an employer has concluded a pension fund contract for its staff.
In future, multi-employer pension funds would be obliged to offer a standard product enabling employees to build up a lifelong, tax-free supplementary pension, the committee said.
It stressed that transferring entitlements to Pensionskassen would subject them to standard pension fund regulations, meaning individuals would no longer have free disposal of their severance pay claims upon retirement.
As an alternative, employees could transfer severance pay entitlements as a single premium into an existing life insurance policy or one taken out specifically for this purpose without incurring insurance tax, the committee added.
The reform package also includes measures to reduce asset management costs for occupational pension funds, decouple them from the Banking Act and introduce new supervisory regulations.
It would also automatically consolidate occupational pension accounts that have not received contributions for an extended period.
Pension funds would gain greater flexibility over investment strategies and risk profiles, including through life-stage models.
The prudent person principle, covering investment suitability, diversification and risk management, would also apply to provident funds.
The government submitted the reforms in April. They could be adopted by the National Council, one of the two chambers of the Austrian Parliament, as early as September, according to a parliamentary press release.
The new provisions are due to enter into force at the beginning of 2028.
