AUSTRIA - The Austrian government has put in place a reform commission today to discuss changes to the laws on pensionskassen, at the same time as pensioners are demonstrating in Vienna.

An interest group representing pension fund members was not discouraged by a snowstorm in Vienna today to demonstrate for measures to relieve pension cut.

Around one-third of all pension fund members in Austria will be suffering cuts in their benefits because of the negative performance of pensionskassen last year. (See earlier IPE-story: Austrian funds average 13% loss)

The group PEKABE is now demanding changes to the legal structure of pensionskassen to ensure a minimum return rate and a state guarantee on contributions made to the system.

The demonstrations were staged on the same day as finance minister Josef Pröll announced the creation of a pension reform commission, to discuss a possible reform of the system - as already outlined in the government agenda in autumn last year. (See earlier IPE story: Pensionskassen could be reformed)

Social minister Rudolf Hundstorfer told IPE no firm plans had been fixed yet but "discussion on various levels" had already taken place with those affected by the cuts.

"I am strongly committed to the state pension system but we cannot ignore the second pillar," noted Hundstorfer.

Whether a state guarantee is useful will have to be discussed with representatives of pension fund members and pensionskassen.

The latter have now presented their own proposal on how to minimise the risk of pension cuts in the future: They want to see a "safety pension" introduced on which every individual pension fund member should be able to choose.

This would comprise a very conservatively-invested portfolio designed to deliver an annual return of around 2.75%, which would mean a lower but guaranteed pension.

Furthermore, pensionskassen want to grow buffers in the funds and are demanding tax exemptions for buffer contributions.

"As Austrian pensionskassen were been founded at the beginning of the 1990s there has not yet been enough time to grow sufficient buffers for times of crisis," the pensionskassen federation argued.

PEKABE has criticised the creation of this "safety pension" and claimed it would only lead to further cuts in pensions.

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