Austria’s corporate provision funds (BVK; betriebliche Vorsorgekassen), which have been managing the “new” severance payment scheme (Abfertigung neu) for around 15 years, had assets under management that exceeded € 10 billion for entitled beneficiaries for the first time in the first half of 2017. In so doing, according to calculations performed by the Oesterreichische Kontrollbank (OeKB), they posted an investment result of +2.73%, compared with an annual average of +2.71% over the last five years, and +1.99% over the last ten years. Currently there are eight corporate provision funds that are licenced and supervised by the Austrian Financial Market Authority (FMA). The market concentration is, however, very high: three of the eight corporate provision funds hold a total market share of more than two thirds (71.6%). These findings emerge from the FMA’s latest market analysis about the first half of 2017.
Since the corporate provision funds are required under law to ensure a capital guarantee for the severance contributions under management, their investment strategy is required to adequately take into account the security, risk diversification, profitability as well as ensuring the availability of sufficient means. As of the reporting date of 30 June 2017, 81.9% of assets are invested in fixed-rate financial instruments, 12.6% in shares and 4.8% in real estate, although a total of 85% of the investments are held indirectly through investment funds. The assets under management for entitled beneficiaries is currently growing by about € 1 billion per annum.
The “new” severance payment scheme (Abfertigung neu)
Under the “new” severance payment scheme, all employees that commenced a new employment relationship from 01.01.2003 onwards have a claim to a severance payment. For this purpose, every employer is required to conclude a contract for admission to a corporate provision fund. From the second month of the employment relationship onwards, the employer pays 1.53% of the gross salary (including 13th and 14th month payments) along with the social insurance contribution to the health insurance fund, which in turn passes the severance contribution on to the corresponding corporate provision fund. The claim for severance is generally made to the affected corporate provision fund, but depending of the manner in which the employment relationship is ended, is fulfilled in different manners. In 2008 the group of persons that pay money into a corporate provision fund was extended to include the self-employed. For specific groups of jobs (e.g. attorney, notaries, civil engineers, as well as farmers and foresters) there is a voluntary possibility to conclude such a provision for self-employed.
In order to perform the business of a corporate provision fund, a licence as a special credit institution pursuant to the Banking Act (BWG) is required, that is granted by the FMA. Consequently corporate provision funds are also subject to ongoing supervision by the FMA. The performing of the business of a corporate provision fund is set out in the Company Employee and Self-Employment Provisions Act (BMSVG; Betriebliches Mitarbeiter- und Selbständigenvorsorgegesetz). It consists of the acceptance and investment of severance payments from salaried employees and self-employed persons. The contributions are held by the corporate provision fund, who holds and manages them as a trustee for the entitled beneficiaries. A separate account is held for every entitled beneficiary, who is to be informed about the balance by means of an account statement annually or when the employment relationship is terminated. The FMA has set out these information requirements in a separate Minimum Standard on Information Requirements for Qualified Beneficiaries of Corporate Provision Funds.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/882 49 516