The Austrian Financial Market Authority (FMA) today published its annual report on the state of Austrian Pensionskassen (pension companies). The Pensionskassen sector, which currently administers company pension commitments for approximately 940,000 people, has also shown itself to be stable in the low interest environment that has now been prevailing for a number of years. The own funds of Pensionskassen have increased commensurately to the assets under management, and stood at € 349 million as at year-end 2017. The Pensionskassen therefore exceed the legal own funds requirement by around 66%.
In the long-term the returns on investment realised by the Austrian Pensionskassen are significantly positive. Since the Pensionskassen system was established in 1990, the average annual performance has stood at 5.3%. In the previous full financial year, performance of 6.1% was achieved. By way of comparison: in the European Economic Area (EEA) performance ranges from between 0% and 9%. In a tricky capital market environment, the performance of investment funds has recently fallen significantly – standing at -1% across the first three quarters of 2018[1].
The Pensionskassen sector is about to undergo regulatory change in relation to investment funds. At the beginning of 2019 the provisions of of the new European Pensions Funds Directive IORP II (Institutions for Occupational Retirement Provision) shall enter into force throughout the EU, which will be implemented by transposition in the Pensionskassen Act (PKG; Pensionskassengesetz) in Austria. The PKG will leave it up to the discretion of the Pensionskassen to decide in which assets they will invest. Previously the Pensionskassen were bound to observe quantitative investment thresholds. In the future the Pensionskassen will be enjoy full freedom regarding the design of their investment policy. In return, they will however be required to fulfil stricter requirements in relation to their risk management – The FMA and the Pensionskassen have used the IORP II implementation period to prepare themselves intensively for the new regime.
For the Executive Directors of the FMA, Helmut Ettl and Klaus Kumpfmüller, the changeover comes during a challenging phase. “In the coming years, we will continue to have to reckon with volatile performance on the capital markets, which will pose serious challenges on the risk management of companies. We have therefore set the bar very high, and have already established high standards in the Austrian Pensionskassen market from the outset. We are well-prepared for the new regime,” remarked Helmut Ettl. His fellow Executive Director, Klaus Kumpfmüller added: “Freedom in the investment of funds does not mean having a laissez-faire attitude, but instead places a greater burden of responsibility on the companies themselves. The FMA will ensure next year that the Pensionskassen do not take on any risks that overextend their risk management.”
In the field of digitalisation the Austrian Pensionskassen sector expects less changes in comparisons to other areas of the financial market. An FMA survey has found that currently only around 30% of the Pensionskassen expect that digitalisation will open up new business models. 70% do not see there being any effects on their business.
The FMA’s 2018 Report on the State of Austrian Pensionskassen can be found (in German only) at https://www.fma.gv.at/pensionskassen/offenlegung/lage-der-oesterreichischen-pensionskassen/
Journalists may address further enquiries to:
Mr. Stefan Maier
+43/(0)1/24959-6001
+43/(0)676/882 49 426
[1] Calculation: Oesterreichische Kontrollbank (OeKB)