The market for state-sponsored retirement provision (PZV; prämienbegünstigte Zukunftsvorsorge), a product for discretionary old age provision, has developed negatively over the years since the state premium was cut significantly in 2012, as well as due to the its unattractive investment performance in the low interest environment. The number of PZV contracts that are still active has fallen year-on-year since the record levels in 2012 of more than 1.6 million, and stood at only 903,000 during the 2022 reporting year, a decrease of -6.6% compared with the previous year. In contrast to approximately 70,000 contracts which either expired or redeemed during the previous year, there were only 6,100 new contracts – the lowest amount since the product was launched. Since the PZV is a product with very long terms, the annual inflow of premiums, despite a fall of 4.73% compared with the previous year, nevertheless remained at a notable level with a nominal amount of € 704 million. The total assets under management in this insurance product fell during the reporting year amidst the difficult environment for investment by 8.98% to € 8.54 billion due to falling asset prices (2021: € 9.38 billion). These are the findings of the annual FMA Study on “The market for state-sponsored retirement provision in 2022”.
A difficult environment for investment
Due to the turbulences experienced in the capital market as a result of the war between Russia and Ukraine, the surge in inflation that triggered the ensuring abrupt change in interest rates, as well as the extraordinary situation of both equities and bonds simultaneously sustaining massive hits, all relevant asset categories for PZV posted negative returns in the reporting year. The investment performance weighted by volume (before costs) therefore fell significantly, with negative performance to – 8.83% in the reporting year, compared with + 8.3% in 2021. The FMA’s hypothetical “stylised benchmark portfolio” (30% Austrian shares and 70% Austrian ten year government bonds) which has been used for comparison purposes however fared even worse, with performance of – 18.47% during the same period. As a state-sponsored old-age pension product the legislator obliged providers to at least guarantee the safeguarding of the paid-in nominal premiums.
State premium
Since 2012, when the state premium for promoting PZV products was halved, it now stands at 4.25%, with the maximum state-sponsored deposit standing at € 3,123.04 in 2022 (cf. € 3056.94 in 2021) with a resulting maximum premium of € 132.73. While the premium has increased for the eleventh year in a row, it still remains significantly below its all-time high of € 210.35 in 2009.
Only a few providers left
Since investment fund management companies have already no longer been selling new PZV contracts for over ten years (and all of their contracts have also already matured in the mean time), out of the 19 insurance undertakings that offered this product during its boom phase, only four were still offering the conclusion of new contracts in 2022. The attractiveness as an investment and pension product has suffered considerably from the state premium having been cut significantly in 2012, as well as the weak investment results in the low-interest environment, which also made it difficult to fulfil the legally prescribed capital guarantee. It still remains to be seen whether the change in interest rates that began during the course of the reporting year will bring relief, and will improve the attractiveness of this pension product again.
The full study can be found 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 88 249 516