Austrian pension fund association expects union support on reform

AUSTRIA – The Austrian pension fund association (FVPK), after negotiating for three years over pensions reform, has said it now expects unions to back the inclusion of occupational pensions in collective-bargaining agreements.

At the beginning of this year, the amendment to the law governing pension funds, the PKG-Novelle, came into effect, bringing more flexibility and individual choice to the Austrian second pillar.

Andreas Zakostelsky, chairman at the FVPK, told journalists in Vienna: “Austrian unions have been part of the negotiations for these reforms, and we think this will incite greater support for the funded pension system from these groups.”

He confirmed the association would speak with unions again in the autumn, before the annual negotiations for the improvement of the collective-bargaining agreements for each industry begin.

The FVPK has held talks with unions on the topic of pensions reform for years now, but Austrian unions are traditionally very pessimistic on capital markets and funded pension provision.

Fritz Janda, managing director at the FVPK, said: “Although the union association itself (ÖGB), as well as the labour chamber (AK), do have a pension fund contract.”

Currently, around 20% of the Austrian workforce has a contract with a Pensionskasse via their employer.

The FVPK also pointed out that a strengthening of occupational pensions in Austria would be in line with the aims outlined in the White Paper on Pensions.

Regarding the amended IORP Directive rumoured to be published in the autumn, the Austrian pension fund association said it was “very relaxed”.

Christian Böhm, deputy chairman at the FVPK, said: “Austrian pension funds are already fulfilling the second and third pillars of Solvency II.”

He said Austria was actually “way ahead” when it came to governance and risk management, and that it was “very good” that the first pillar of Solvency II would not be included in the IORP II draft.

“How does the European Union expect companies to recapitalise if European institutions are forced to invest only in government bonds rather than corporates,” he added.
Böhm argued that strong institutional commitment to corporates was helping the US to recover before the EU.

“Pension funds are important sources for long-term financing for capital-intense industry, which the European Union needs,” he said.