AUSTRIA - The Constitutional Court  has dismissed a petition by Austrian MPs to allow beneficiaries to withdraw their benefits early should they wish so.

MPs from the Green party and the right-wing FPÖ last year called on the court to change a passage of law concerning Pensionskassen, which lists two exceptions to the “no individual withdrawal” rules and which in turn could make withdrawal the norm. (See earlier IPE story: Pensionskassen are ‘confident’ about Austrian court action) 

The MPs argued that in times of major losses in the capital markets the property of the beneficiaries was “destroyed” in the Pensionskassen and people should be allowed to leave the system.

However, the Constitutional Court found a change to this one legal passage would lead to “a completely different” Pensionskassen system from the one intended by the government.

The judges decided such a far-reaching change was not part of the remit of the Constitutional Court.

They also argued that given the lack of regulations on individual choice in the law, individual withdrawal would still not be possible even if the one passage was changed.

This judgment came at the same time as Pensionskassen are being discussed by parliament again. Four MPs have brought forward a motion to speed up the process of reforming the second pillar in Austria - a move which has been discussed over the last year but has yet to be decided upon. (See earlier IPE story: Economist warns pensions should not contain equities )

Elsewhere within the Austrian pensions marekt, the €3.2bn ÖPAG pension fund said it generated a 10.4% return on investments last year, above the 9% market average. (See earlier IPE story: Austrian pension funds return 9%)

The fund is cautious about prospects for 2010 and a possible economic setback in the first half, which could lead to corrections in both the equity markets and for low-rated bonds.

The pension fund is therefore increasing the duration of government bonds within the portfolio while emerging market bonds might be used opportunistically, Walter Schmoiger, head of asset management at ÖPAG, revealed.

And at one of the smaller funds in the Austrian system, the €315m Bonus Pensionskasse returned between 5.1% and 9.3% on investments depending on the portfolio held by beneficiaries.

“Most of our portfolios have a defensive strategy as they have a minimum return requirement,” explained Gabriele Feichter, key account manager at Bonus.

The fund will be introducing three risk categories for its clients this year so it can adopt a lifecycle model.

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