At the end of the first half of 2021, Austrian Pensionskassen (pension companies) for the first time had more than one million contractual beneficiaries (1,003,352). As a result, almost one quarter (23%) of the non-self-employed working population in Austria at least has an entitlement to a pension from this form of company old-age provision. Around 12% of all beneficiaries also already receive such a type of additional pension. Almost two out of every ten commitments (18%) are defined benefit-based, i.e. the amount of the pension to be paid out is stipulated in the pension contract. 78% are defined contribution-based, i.e. the amount of the pension is composed of the agreed amount paid in as well as the returns achieved. 4% are hybrid systems, i.e. a mixed form based on both basic models. The combined assets managed by Austria’s Pensionkassen stand at approx. € 26 bn (also as of H1 2021), which is around 7% of the Austrian gross domestic product GDP), i.e. the total amount generated by the population of Austria in a year. The insurance industry’s alternative product in the area of company old-age provision, “occupational pension group insurance”, has stagnated, with invested assets of around € 1.1 bn . These are the findings of the FMA’s 2021 Report on the state of Austrian Pensionskassen, which was published today.
A challenging environment for investing
The low interest environment, which has now been prevalent for a long time presents Pensionskassen with massive challenges, as secure investment products do not produce any real returns, and in some cases even have negative real interest. Due to their long-term investment horizon, targets for returns and the continuing relatively low liquidity needs, Pensionskassen are however able to pursue a dynamic investment strategy with a somewhat higher risk/performance profile. For a considerable period of time, they have been reducing the amount of debt securities held, especially more secure government debt with low returns in favour of more volatile shares and participations that yield higher returns. Debt securities amounting to around € 9 bn as of mid-2021 still accounted for 34% of the total assets, but were overtaken by shares, with a volume of € 10 bn , or 39%, as the most important asset class. The rest is invested as cash at banks (7%), real estate (5%) as well as various other assets (13%). Based on their risk/performance profile Austrian Pensionskassen, compared EU-wide, are therefore among the company old-age provision providers in the quartile with the most dynamic investment strategy.
Despite the economic turbulences during the COVID-19 crisis, the result traditionally more volatile performance in phases of upturn and downturn, has in the mid-term had a comparatively moderate impact: Austrian Pensionskassen were able to post appealing returns for the full year in 2020 (+2.5%) and the first half of 2021 (+4.8%). They are therefore in line with the average annual performance since the introduction of Pensionskassen in Austria in 1990.
Comparatively sustainable portfolios
Climate stress tests conducted by the FMA as well as analyses about the extent to which the portfolios of Pensionskassen are sustainably invested with regard to a change towards a CO2-neutral economy, displayed pleasing results. On the one hand there are in a better place than international benchmarks (such as MSCI ACWI ETF) in relation to transition risks, and on the other hand the threat of loss of assets from climate stress are able to be weathered. The full report (in German only) can be found on the FMA website to download under the following link.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/88 249 516