Occupational Group Insurance

The Austrian pensions system consists of three pillars:

1. state provisions
2. company old-age provisions and
3. private old-age pensions

Occupational group insurance is a form of company old-age provision.

An insurance contract for occupational group insurance may be concluded by an employer for employees on the basis of a works agreement, a collective labour agreement or an individual agreement between the employer and the employees.

The benefits of such insurance contracts prescribe a life-long old-age pension and a survivor’s pension (i.e. widow’s or widower’s pensions as well as orphan’s pensions), whereby the survivor’s pension may also be of a temporary nature. In addition an invalidity pension  may also be granted.

Since 23 September 2005, insurance undertakings have been allowed to offer occupational collective insurance pursuant to Articles 93 to 98 of the Insurance Supervision Act 2016 (VAG 2016, Versicherungsaufsichtsgesetz 2016), which is a form of collective pension insurance. The tax law framework is aligned to that of the Pensionskassen (pensions companies).

Operational group insurance may only be operated in the form of a classical life insurance, with the acquisition costs being distributed equally across the whole duration of premiums being paid. An interest rate of up to 0,50% pursuant to the Regulation on the Maximum Interest Rate (VU-HZV – Höchstzinssatzverordnung) is used for this calculation. In addition the policyholder also receives a participation in profits, the amount of which is not guaranteed and in the first instance is dependent on the returns generated by investments of the respective insurance undertaking. Since the insurance undertakings guarantee the pension amount, the mortality tables applied for the calculation of pensions are already guaranteed at the time the contract is included.

In the event of involuntary termination of employment, the employer may dispose of accrued entitlements immediately (immediately vested amount), for example by continuing to leave the paid-up amount in the occupational collective insurance of their former employer or to transfer the amount of these entitlements (vested amount) in a Pensionskasse (pensions company) or the occupational group insurance of their new employer.

The FMA feels it important that beneficiaries (both those entitled and recipients) are informed regularly and comprehensively in a transparent manner. The minimum requirements for information to be sent to beneficiaries (entitled) and beneficiaries (recipients) are set out in the Information Requirements Regulation for Occupational Group Insurance (BKV-InfoV – Betriebliche Kollektivversicherung Informationspflichtenverordnung). In addition the FMA  Minimum Standards published in August 2021 also contain the information to be provided to beneficiaries upon their inclusion in occupational group insurance as well as information to be provided if they leave the company prior to the occurrence of a benefit Event.