“The boom regarding the state-sponsored retirement provision has been lasting for three years now,” as FMA Executive Director Heinrich Traumüller sums up the FMA study examining the “Market of state-sponsored retirement provision in 2005”. The number of contracts concluded rose by 65 per cent to almost 769,000 last year. “Thus, statistically speaking, one in eight Austrians under 60 years of age has such an old-age provision product,” says Traumüller.
In 2005, the premium volume of the state-sponsored retirement provision rose by 44 per cent to EUR 523 million. According to an FMA estimate, the annual premium volume will presumably rise to some EUR 860 million by 2012. In the previous year alone, the assets managed in connection with the state-sponsored retirement provision have more than doubled (+109%), amounting to a total of almost EUR 1.1 billion.
“What is most remarkable,” says Traumüller, “is the fact that the state-sponsored retirement provision is taken out as a long-term old-age provision. Almost every other contract concluded in 2005 has a minimum maturity of 35 years.” It is self-evident that the average annual premium goes down with a longer maturity: In contracts with a maturity of 10 to 14 years, the annual premium is just below EUR 1,000, in contracts with a 35 to 39-year-maturity it is about EUR 600, and in contracts with a maturity of more than 45 years it amounts to a mere EUR 300. The market of state-sponsored retirement provisions continues to be heavily dominated by insurance undertakings, which account for almost 90% of all contracts concluded. Investment fund management companies are represented only with 10-year contracts.
With regard to investments, the diversification in foreign shares (CEE securities) is clearly increasing with 2.3% (2004: 0.6%). It will, however, be inevitable to revise the statutory investment rules, as the market capitalisation in Austria continues to exceed 30 per cent of the gross domestic product (GDP) and thus no investments at the Wiener Börse (Vienna Stock Exchange) would be possible as of 2007.
As an alternative to the statutory “capital guarantee”, the FMA suggests to also allow so-called “life-cycle asset allocation” models. These models do without any capital guarantee, but as maturity draws nearer the proportion of shares is reduced and, in return, the proportion of long-term government bonds is increased. Says FMA Executive Director Traumüller: “Our simulation calculations have shown that very similar investment results can be achieved at a very low risk. With the “life-cycle”, however, the overall yields are higher, as the capital guarantee costs of about 1 per cent per year do not apply.”
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516