Inflows of contributions and the financial markets’ good performance allowed the assets under management of the Austrian corporate provision companies to increase to a record level, or € 21.1 billion at year-end 2024: an increase of €2.5 billion or 13% over year-end 2023. These are the findings of the Austrian Financial Market Authority’s “Report on the State of Corporate Provision Companies” (Betriebliche Vorsorgekassen (BVKs)) which was published today. The eight provision companies have been responsible since 2003 for administering the “Abfertigung neu” severance scheme, into which every Austrian employer is required to pay contributions for its employees. Currently around 11.2 million benefit entitlements are managed, a 2.8% increase year-on-year. This high number can be explained by the fact that employees change employer, their corporate provision company may also change, with many beneficiaries having multiple benefit entitlements held at different corporate provision companies.
Following the impact of the global turn-around in interest rates and the war in Ukraine in 2022, which negatively affected the markets, and led to a negative investment performance, in 2024, positive performance of 4.7% was posted, (c.f. +4.4% in 2023 and -7.7% in 2022). Corporate provision companies’ obligatory capital guarantee combined with fluctuating payment demands dictated by employment market developments, also legally require them to adopt an investment policy that pays particular attention to security and liquidity. The assets under management of the corporate pension companies at year-end 2024 were primarily invested in debt securities (65%), equities (15%), cash at banks (5.0%), real estate (5.6%) as well as loans and credits (5.4%), the remaining amount (3.3%) was held in other assets. The structure of the portfolio remains largely unchanged compared with the preceding quarter apart from marginable shifts.
Corporate provision companies are required to form a capital guarantee reserve to cover the guarantee prescribed under law on the paid-up capital. During the reporting quarter, their value fluctuated by between 0.65% and 1.20% of the total amount of benefit entitlements by BVKs, or 0.90% on average. At year-end 2023, the average stood at 0.86%.
The full quarterly report can be found (in German only) on the FMA website at: https://www.fma.gv.at/vorsorgekassen/quartalsberichte/
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