Austrian Pensionskassen showed resilience by recovering from a -10% at the time of the equity market downturn in Q1 2020 to positive returns of 2.55% at the end of the year, according to the latest figures released by the local occupational pension fund association FVPK.
Last year’s performance remains below the 11.63% generated in 2019, but above a -5.14% in 2018, despite the crisis caused by the COVID-19 pandemic. Average returns over a 30-year period stood at 5.30% per year, including 2020, FVPK said.
The eight Austrian pension funds managed assets worth €25.17bn for over 995,000 insured at the end of 2020.
According to FVPK, Austrian Pensionskassen increased the amount of sustainable investments based on the United Nations’ Principles for Responsible Investment to €20.5bn last year, up 25.8% compared to €16.3bn in 2019.
The total sum of sustainable investments represents 81.7% of allocations.
The outlook for investments remains “challenging” in 2021 with further, harder waves of lockdowns in place to respond to the spread of a mutated COVID-19 virus, it said.
Work in progress on reforms
FVPK supports the idea of a general contract for pension funds, or General-Pensionskassenvertrag. With a general contract, which is also part of the government programme to reform the Austrian pension system, employees can transfer severance payments to a Pensionskasse and receive a lifelong supplementary pension.
Currently only employees who work for a company that has finalised a pension fund contract for its employees have the option to convert the severance payment into a lifelong pension at the time of retirement.
Andreas Zakostelsky, chair of the pension fund association, believes it is necessary to accelerate the expansion of the pension fund system in Austria.
“Adding an occupation pension to the state pension will be crucial in the next few years in order to be able to live a secure life in old age, ” Zakostelsky said, pushing for the measure to be put in place by the government “as quickly as possible”.
He added that the current economic crisis, resulting in an increase of public debt, will continue to put pressure on public pension systems.
The general pension contract would lead to extending a supplementary pensions payment for all, including low-wage earners, part-time workers, and women, the association said.