Austria’s long-debated “Generalpensionskassenvertrag” could finally be implemented this year, but pension experts warn it may fall short of significantly expanding occupational pension coverage.

The proposal, first introduced around five years ago by the Austrian second pillar association FVPK, would allow all individuals – not just the approximately 25% of employees currently covered by a Pensionskasse – to transfer accrued severance pay from mandatory provident funds into pension funds, thereby enabling the purchase of tax-advantaged annuities rather than taking benefits as a lump sum at retirement.

Now incorporated into what Austria’s coalition government has called the most significant pension reform in two decades, the plan has gained political backing across party lines.

Speaking at the 12th occupational pension conference in Vienna, Johannes Gasser, member of Parliament (MP) for the liberal NEOS party, said the Generalpensionskassenvertrag could be a “game changer”, broadening access to second pillar solutions.

Heike Eder, MP for the conservative ÖVP, echoed the sentiment, describing the measure as “an important step” but calling for follow-up reforms. It should be possible for people to access lump sums for property purchases, for example – something already permitted in the Swiss system, she noted.

Even Markus Koza of the Greens, traditionally cautious on pension reform, welcomed the idea in principle. However, he underlined that any transfer from the provident funds to Pensionskassen must remain voluntary.

“The severance pay accrued in provident funds was never intended as supplementary pension provision,” he said, arguing it should remain fully accessible to employees.

Pension industry on the fence

Despite political enthusiasm, pension professionals voiced scepticism.

Conference organiser Thomas Wondrak, founder of consultancy konsequent_wondrak, cautioned that the legislative change underpinning the proposal amounted to just “two paragraphs”, and that it would not, on its own, expand coverage in the second pillar.

While MPs confirmed that broader reform options were being explored, they acknowledged these were largely dependent on budget constraints. Koza reiterated his party’s opposition to any state subsidies or mandatory elements for either second or third pillar provision.

Both government representatives called for deeper dialogue between the pensions industry and policymakers – a call that resonated with delegates at the event.

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