Last year, the eight Austrian Pensionskassen, with a combined asset pool of €29bn, generated an average return of 7.76% — marking the best result in the last four years after 6.4% in 2023 and a significantly negative return of -9.7% in 2022.
Since inception in 1991, this part of the second pillar has so far delivered an annualised average of just over 5%, “which is clearly better than many other forms of investments,“ the Vorsorgeverband, the association of Pensionskassen and Vorsorgekassen in Austria, noted in a statement.
Statistically this result means a supplementary pension payout of just over €400 per month (plus two additional annual payments) for the 1.1 million people with savings in the second pillar. But the occupational pension contracts and their pay-out rates vary greatly with a few people still receiving several thousand euros monthly.
To date, only a minority of employees in Austria is covered under the second pillar – around one fourth.
According to a recent study by the economic think tank Wifo, many Austrians still stick to their savings book as the main means of supplementary retirement savings (54%), followed by life insurance (34%) – mostly non-unit-linked – and saving with a building society (31%). Only one in four interviewed thinks that the pension from the first pillar will suffice in retirement.
Once more, Andreas Zakostelsky, chair of the association of Pensions- and Vorsorgekassen, called on policymakers to help increase participation in the second pillar.
“These investments can help all Austrians to profit from international economic developments,“ he added.
Currently, however, Austrian politicians are still busy putting together a government after the elections last autumn. A coalition between the right-wing FPÖ, which had emerged as the winner, and the runner-up, the conservative ÖVP, seems most likely.
Provident funds catching up quickly
Being a mandatory system, the provident funds (Vorsorgekassen), are quickly catching up in size with the Pensionskassen. In 2024, the system that had been implemented in 2003 managed €21.3bn in assets, and it covered 3.9 million Austrians, out of around 4.4 million employees.
Not having been set up as a supplementary pension system in itself, the Vorsorgekassen sector has to invest more carefully than the Pensionskassen and offer a guarantee on the contributions made.
Hence the eight Vorsorgekassen managed an average return of 4.9% for 2024 after 4.4% in the previous year and a long-term average (since 2004) of 2.2%.
From the start, the Vorsorgekassen voluntarily committed themselves to sustainable investment policies – which some of the Pensionskassen have now adopted as a strategy to position themselves in a market that sees little movement.
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