“For the first time since its introduction five years ago, the state-sponsored retirement provision had to tackle a major challenge, due to the global financial crisis,” FMA Executive Directors Helmut Ettl and Kurt Pribil stated, commenting on the results of the FMA study “The market for state‑sponsored retirement provision in 2008”. Despite a difficult market environment, the state‑sponsored retirement provision continued to grow substantially: compared with the previous year, the number of contracts rose by 13.1% to 1,340,758 in 2008, the earned premiums amounted to €920 million (+12.9% on the previous year) and the assets managed to €2.79 billion (+10.8%) by the end of 2008. The average annual premium was €612 for insurance undertakings and €626 for investment fund management companies. Yet the slumping share prices, a consequence of the financial crisis, strongly impacted performance, and nearly every provider of state-sponsored retirement provision had to post negative results for the first time since the product was launched: volume-weighted performance was minus 15.3% in 2008 (2007: +1.3%).
As in previous years, insurance undertakings clearly dominated the market for state-sponsored retirement provision. They managed to increase the number of contracts by 14% to 1,222,765, giving them a market share of 91.2%. In the case of investment fund management companies, the number of contracts rose by 4.6% to 117,993, accounting for a market share of 8.8%. From a performance perspective (also volume-weighted), at 14.3% the funds of insurance undertakings also did better than those of investment fund management companies, where performance dropped by 20.5%.
Contracts for state-sponsored retirement provision must, by law, run for a term of at least ten years. Investment fund management companies offer only ten-year contracts, while insurance undertakings also offer contracts with considerably longer terms. At the end of 2008, six out of ten contracts had terms of 25 years or more, and 19.6% were even running for more than 45 years.
“Consumers continue to embrace the state-sponsored retirement provision. After only five years every fifth Austrian under 60 has a contract for state-sponsored retirement provision,” the FMA Directors noted. “The continued interest in long-term commitments proves that the state‑sponsored retirement provision is not replacing existing savings methods but being used to build up old-age security.”
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Klaus Grubelnik (FMA Media Spokesperson)
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