The assets under management in “state-sponsored retirement provision” (PZV; Prämienbegünstigte Zukunftsvorsorge) increased by 2.9% to € 8.4 billion, while the assets managed by investment fund management companies (KAGs; Kapitalanlagegesellschaften) fell by 35% to € 236 million was identified, while assets under management of insurance companies increased by 4.6% to € 8.2 billion. The number of state-sponsored retirement provision contracts fell for the fourth year in a row. The number of contracts was down by 8.5% to 1 377 272 at year-end. The portfolios held in contracts from insurance undertakings decreased by 6.7%, while products from investment fund management companies fell by 57%. The volume of premiums earned and the net amount paid in also decreased by 6.2% year-on-year to € 914 million. The volume of premiums for insurance contracts decreased by 4.55% to € 896 million, and by 50% for investment fund management companies to € 17.9 million. The substantial decrease in products from investment fund management companies can be attributed to the fact that they have not been conducting any new business in this area since 2010, while existing contracts exclusively with a 10 year maturity are currently generally maturing. In the case of insurance undertakings the number of new contracts also fell by 19% to 18,474 in 2016, with the three largest active providers having a total market share of 75%. The investment performance on the total capital before costs stood at +5.9% in 2016, (for insurance contracts +5.81%, and investment fund management companies -0.17%).
Improved transparency of products
“In order to introduce greater transparency into the very divergent cost structure of the individual providers, the Austrian Financial Market Authority (FMA) tightened up information obligations at the start of 2016,” the FMA’s Executive Directors, Helmut Ettl and Klaus Kumpfmüller remarked: “Comparing the details that are now compulsory shows that the costs passed on in the prevailing low interest environment have considerable reduced the total interest amount.” In the most extreme case this reduction was 46%, as a result of which, out of a total interest return of +2.5%, only +1.35% was effectively passed on to the customer. The FMA’s Executive Board therefore recommends consumers, in particular in light of the long terms involved with PZV contracts to analyse the information that is made available to them very carefully. 70.1% of all contracts have a term of longer than 25 years, and more than one quarter (25.9%) even have terms of longer than 45 years.
As the legislator prescribes a guarantee for state-sponsored retirement provision on the nominal value of the paid-in capital, the providers use different models to ensure that they able to meet this guarantee: measured in terms of the total guarantee amount 31% use an internal guarantee model, 29% external reinsurance, 19% use derivative-based guarantees and 21% use hybrid forms of guarantees. The number of contracts, for which the equity share that can be recognised in income was reduced to below 1% in order to at least be able to guarantee that the paid-in capital could be paid-out again, stood at 26,952 at the end of 2016, or 2% of all valid contracts. The problem of such “stopped out contracts” in particular affects the investment fund management companies, for whom 16.7% of contracts are affected, while only 1.7% of contracts for insurance undertakings are affected.
State premium
The state premium for the past four yours stood at 4.25% of the paid-in premium. The state premium was still 9% in 2010 and 8.5% in 2011. The maximum state-sponsored deposit increased from € 2,561.22 in 2015 to € 2,676.89. The maximum state premium for 2016 of € 113.77 is once again higher than in the previous year (€ 108.85) but considerably below the highest value of € 210.35 in 2009.
The complete study is available on the FMA website (in German only) at https://www.fma.gv.at/publikationen/studie-praemienbeguenstigte-zukunftsvorsorge/
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/882 49 516