Just over one million non-self-employed persons (precise number as of 30 June 2024: 1,081,514) are currently covered in the Austrian Pensionskassen (pension companies) system. As of this reference date, Austria’s eight Pensionskassen (PKs) managed assets of € 27.6 billion for them.
Today, around one quarter (23%) of the employed already has an entitlement to such a pension. Approximately 14% of them already receive an additional pension from this form of occupational retirement provision, with the remaining 86% still currently in the accumulation phase.
The annual payments into this system are therefore higher, at € 1.4 billion, than the total of benefits paid out by the system of € 1.2 billion. 98 % of the entitled beneficiaries have a defined contribution pension commitment; this means that the actual amount of their pension depends on long-term investment performance and therefore upon the development of the capital market. On average over the last ten years performance has been +3.11%. A mere two percent of entitled beneficiaries have a defined benefit commitment, i.e. An amount of additional pension that is guaranteed in advance. The capital required for this makes up around one-fifth of the total assets of the Pensionskassen. The counterpart to the Pensionskassen in the occupational retirement provision sector, occupational pension group insurance (Betriebliche Kollektivversicherung), continues to be marginalised, with managed assets having stagnated for years of around € 1.1 billion. These are the findings of the FMA’s Report on the state of the Pensionkassen in 2024.
Pension gap for women also exists in company old-age provision
While 46% of beneficiaries (entitled and recipients) are women, their proportion of the premium reserve that is ultimately relevant for the pension amount stands at a mere 27%. The average premium reserve for men, of € 32,466, is more than twice as high as for women (€ 14,234). On the one hand, this reflects income disparity between men and women, as well as the latter’s higher proportion of part-time employment as well as their periods of maternity leave, while also leading to an additional pension that is not even half the amount.
Volatile investment strategy
In light of its long-term investment horizon as well as low and above all planable liquidity need, Pensionskassen are able to pursue an active investment strategy with a higher risk-return profile. The result, however, is a volatile investment performance. The investment result has fluctuated between +11.6% (2019) and – 9.7% (2022) in the past ten years; in 2023 performance stood at +6.4%, during H1 2024 it was +4.0%.
Despite the volatile performance, in 82% of Pensionskasse commitments (measured in terms of the premium reserve) the minimum yield guarantee that is prescribed under law is waived by means of “opting out”. Its legal construction does not constitute a full capital guarantee in reality, but merely guarantees an increased benefit for one year. Its annual target value has been negative by up to – 0.4% since 2015 due to the low interest environment.
While Pensionskassen hold more than 95% of their assets in investment funds, they actively adapt their strategy. It there reduced the calculated holding in bonds from 58.0% to 36.6%, while in contrast increasing the proportion of shares from 24.4% to 36.9% in light of the low interest environment from year-end 2012 until mid-2024. More than one-fifth of PKs’ total assets are invested in unlisted private investments (real estate, loans, other assets). In European comparison they also have the highest proportion of alternative assets, with derivatives also playing an important role.
Climate Stress Test
Pensionskassen also have a material role as large institutional investors in the battle against climate change. The proportion of assets that are damaging to the client in their portfolio still stands at 26% (2023: 28%), primarily in the fossil fuels and real estate sectors. The FMA has therefore again performed a climate stress test on Pensionskassen in 2024, this time in accordance with the standards stated in the European Commission’s Fit for 55 Package. The baseline scenario resulted in a value impairment by -3.5%, the first adverse scenario by -5.8% and the second adverse scenario one of -16.1%. Pensionskassen therefore face large challenges in this way. The full report can be found on the FMA website (in German only) at https://www.fma.gv.at/pensionskassen/offenlegung/lage-der-oesterreichischen-pensionskassen/
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)