Fachverband der Pensions- und Vorsorgekassen (WKO), the Austrian association established to represent the interests of pension and provident funds, is calling to make company pensions mandatory, to relieve the system from future challenges resulting from a growing and aging population.
According to figures by the Federal Statistical Office Statistik Austria, the Austrian population will grow to reach 10 million in the 2060s, at the same time increasing pressure on the country’s pension system, like in other European countries, the association said.
“This pressure can be greatly reduced by expanding company pension funds. We are therefore calling for an expansion of the pension fund system in the form of a mandatory requirement,” said Andreas Zakostelsky, the association’s chair.
The Old Age Security Commission – Alterssicherungskommission – should be responsible for designing the mandatory system, Zakostelsky added.
Austrian pension and provident funds – Pensionskassen and Vorsorgekassen – have recorded positive returns despite volatile financial markets.
The country’s eight Pensionkassen have recorded a robust return average of 6.42% last year, from -9.67% in 2022, managing in total €26.77bn worth of assets, according to figures published today by the WKO.
Austrian assets under management increased year-on-year in 2023 from €24.81bn in 2022.
The overall positive performance in 2023 was achieved despite the fact that returns slowed down to 1.91% in the third quarter of 2023, after a 3.8% recorded in Q2, with pension funds facing a challenging financial market environment, geopolitical tensions, and still high levels of inflation.
The provident funds also achieved positive results in the past financial year at 4.62% on average, from -7.73% in 2022, with investment strategies focused on long-term financial stability, it added.
The provident funds currently manage assets worth €18.83bn, up from €16.52bn in 2022, for around 3.9 million beneficiaries, the association said.
Provident funds have to constantly deal with capital outflows due to the capital withdrawal options given to members, meaning that the schemes have to follow conservative investment strategies.
“The existing legal framework makes it difficult for provident funds to exploit the full potential of returns for their beneficiaries. An update of the regulations for pension funds would therefore be appropriate,” Zakostelsky said.
He added that company pension provisions as a supplement to state pensions are essential to guarantee quality of life in old age, adding that it is necessary to open up supplementary pension system for everyone in Austria.