The number of contracts for “state-sponsored retirement provision” rose by 24,000 to roughly 1.64 million contracts in 2012, which represents a 1.5% increase. At nearly € 1.1 billion, the volume of earned premiums and net premium payments was 0.2% lower than in the previous year, while the assets managed rose by 24.6% to € 7.12 billion. Volume-weighted performance amounted to 5.6% in the year reported on. This was disclosed in “The Market for State-Sponsored Retirement Provision in 2012”, an annual study published today by the Austrian Financial Market Authority (FMA).
The growth in the number of contracts was solely due to insurance products, which grew by 45,000, or nearly three per cent, to total 1.54 million contracts. Investment fund management companies, on the other hand, showed a 21,000, or 17.8 per cent, drop to 97,000 contracts. Market shares have thus further shifted towards insurance companies, which now account for 94.1% (92.7% in 2011). The market share held by investment fund management companies amounts to 5.9% (7.3% in 2011).
With regard to the volume of earned premiums and net premium payments, insurance companies barely made +0.3%, an increase that was eaten up by the 7.3% decrease generated by investment fund management companies. At a decline of € 3 million to € 1,075 million, the sum total of all earned premiums and net premium payments was thus for the first time lower than in the previous year.
The average annual premium in 2012 was € 653 (€ 624 in 2011) for contracts with insurance undertakings and € 711 (€ 699 in 2011) for those with investment fund management companies. The maximum state-sponsored deposit was up from € 2,329.88 in 2012 to € 2,445.50 in 2013, while the maximum state premium increased from € 99.02 to € 103.90.
Following the difficult past few years, state-sponsored retirement provision products again performed clearly positively in 2012: the entire 2012 portfolio generated a yield of 5.6%. In 2011 there was still a loss of 2.9% to account for. At 7.4%, insurance products showed a higher volume-weighted performance than products from investment fund management companies, which made 3%.
State-sponsored retirement provision products come with a legal guarantee on paid-in capital. In cases of severe investment losses, such as those incurred by the global financial crisis, it might therefore become necessary to fully hedge the assets invested in shares and thus any resulting further risk of loss. These are being referred to as “stopped out” products. “Stopped out” products are those which effectively invest less than one per cent in shares. Consequently they are no longer vulnerable to any downward slide in the share market, but can also not participate in any upward movements, or only to a very limited extent.
Some 122,470 contracts (124,306 in 2011), or 7.5% (7.8% in 2011), were reported as having been stopped out as at 31 December 2012. The assets managed in these contracts amounted to approximately € 802 million.
According to the law, contracts for state-sponsored retirement provision must run for a term of at least ten years. Investment fund management companies currently offer only ten-year contracts, while insurance undertakings also offer contracts with considerably longer terms. At the end of 2012, more than two thirds of all contracts had terms of 25 years or more, and more than one third of them covered a period of more than 40 years.
The complete study is available on the FMA website (in German) 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