Amendments to laws in the National Council: Reform for company old-age provision opens up pension companies for all employees from 2028
Austrian pension companies and corporate provision companies‘ managed assets have continued to grow in the 2nd quarter due to inflows and positive market development. As of 30 June, pension companies’ assets under management increased by 5.9% to €31.9 billion, while corporate provision companies’ assets under management increased by 5.7% to €25.2 billion. These statistics on quarterly performance were published by the Austrian Financial Market Authority (FMA) today.
The number of pension company beneficiaries (entitled and recipients) increased slightly to approx 1.148 million people in the second quarter. The number of them drawing a pension grew to 163,917 of 14% of all beneficiaries. Currently, around a quarter of non-self-employed in Austria have an entitlement to a benefit from a pension company. Employers make voluntary contributions to a pension company.
In the case of corporate provision companies, the number of entitlements increased slightly to 11.53 million (including instances of multiple entitlements at different corporate provision companies, e.g. due to changing employers). In contrast, all employees have claims through corporate provision companies under the “Abfertigung neu” severance scheme. This happens automatically through the employer, who pays in 1.53% of gross salary into a provision company every month.
“There is a large dormant potential for the Austrian capital market through occupational retirement provision as the second pillar of the pension system as well as for all employed persons, who wish to make additional pension payments,” explained FMA Executive Director Mariana Kühnel. As the integrated financial market supervisory authority, the FMA is also competent for supervising pension and corporate provision companies.
Austria’s National Council today discussed an amendment about occupational retirement provision proposed by the Federal Government. The amendment will potentially enable access to a pension company for all employees, and contains additional incentives for investing in the pension system’s second pillar from 2028. The amendment will also lead to additional new supervisory powers for the FMA such as in the area of consumer information and providers’ management fees.
In the future, all employees will be able to transfer acquired severance benefits free of charge to a pension company. As a result the 75% of employees, whose employer has not concluded a contract with a pension company on their behalf, will have the opportunity of a tax-free supplementary pension for their entire lifetime. Furthermore, the amendment will also create the opportunity to invest mandatory corporate provision company contributions in a pension investment group (VVG). The objective is to make higher returns available to them in more dynamic types of investments. In this option, the capital guarantee that had applied to date for “Abfertigung neu” severance scheme, as well as option for early pay-out in the event of termination of employment.
Currently, around €1.1 billion (around 5% of managed assets) are paid out by provision companies annually – primarily in the case of a change of employer or reaching pensionable age. In the future, these financial means could potentially remain in the system: either by transferring them into a pension company, or by selecting a pension investment group, that is only allowed to be paid out, when pensionable age is reached. Since this is a voluntary option, it is currently difficult to gauge how many employees will select these options.
“Clear and comprehensible information and awareness-building of employees about the new options in the second pillar of the pension system will be essential in the coming months, to ensure that these opportunities are taken up”, remarked FMA Executive Director Mariana Kühnel in conclusion.
The quarterly reports about pension companies and corporate provision companies can be downloaded from the FMA website (in German only).
Journalists may address further enquiries to:
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43 (1) 249 59-6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]