AUSTRIA - Calls to introduce a "safety pension" with a lower calculation rate in Austria will not completely rule out the need for pension cuts, officials at Allianz have argued.
In the current pension fund reform debate, some pensionkassen have suggested a so-called "safety pension" should be introduced to offer people an alternative which would less likely lead to pension cuts. (see earlier IPE-articles: Pensionskassen to be reformed and ÖPAG head says second pillar loss is unrealistic)
However, Andreas Csurda, head of the Allianz Pensionskasse, said his "big worry is that the consumers will believe this is a panacea" and argued "some might get a nasty surprise".
He explained even when carrying much lower equity risk there is no guarantee that the minimum return needed to guarantee the calculation rate will always be achieved, and further argued no guarantee can be achieved under such a model.
"We have taken a different path from the start and said we tell people who want guarantees to change into the insurance-based occupational pension scheme Betriebliche Kollektivversicherung (BKV)", he added.
The BKV is similar to the German pensionskasse, as both are insurance-based schemes which guarantee a certain return, albeit this guarantee comes at a price.
The BKV concept was introduced in Austria in 2005 but never really took off as equity markets were performing quite well back then.
Csurda confirmed that the idea of presenting the BKV as an alternative to pensionskassen for people who want some kind safety has been taken up by the reform commission and is currently being discussed.
Austria's largest union, the ÖGB, had put this choice in place for its members from the start but said most people had chosen the pensionskasse, although some closer to retirement have opted for the safer scheme.
The €421m Allianz pensionskasse said earlier this year that its aim was to "preserve capital" for its clients and Martin Bruckner, head of Allianz Investment, confirmed the pensionskasse has a "very conservative" asset allocation at present, with a "one-digit" equity quota and mostly high-quality bonds.
The fund is not invested in alternatives as "the thesis that there are uncorrelated assets has suffered greatly last year", argued Bruckner.
Csurda confirmed all investments will be more closely scrutinised this year as many established academic theories about investments were proven wrong last year and revealed risk management has to be continuously adapted.
If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com
No comments yet