AUSTRIA - The €250m fund for 8,000 doctors in the country's largest province of Lower Austria is facing massive financial difficulties but not because of the credit crisis.

The mandatory supplementary pension fund for doctors, known as "Wohlfahrtsfonds", cut its equity exposure to zero step-by-step when international stock markets showed signs of turbulence last year.

The fund is currently 25% invested in directly-held domestic real estate while 60% is held in cash on deposit, and 15% is invested in bonds.

As a result of this strategy, the fund is expecting a positive return of almost 3% in 2008 while the old asset allocation strategy, which included equity holdings ,would have delivered a loss of up to 10%, according to officials.

This is not the cause of its troubles, however, said its president Christoph Reisner, but because the doctor's fund is in need of long overdue reforms.

"Several measures should have been taken long ago because there are doctors with a significant mismatch of their contribution and the pension they get," he said.

"These individuals' underfunding levels to an unbelievable extent burden the fund and the active members unduly."

Reisner has critisised former board members of the fund for advising the Austrian media of a "scandal" which could mean possible pension cuts, contribution increases or a raise in the retirement age.

"To go public and talk about a scandal while the committees are still discussing measures with the experts shows an attitude which rates individual interests higher than the sustainability of the whole fund," he claimed.

He suggested the two former board members involved could have made changes in the past as certain measures on the table now were recommended in 1994 and again in 1998, 2001, 2003 and 2005 in various surveys of the fund.

Reisner explained the board, together with doctors' representatives, are likely to reach a decision on necessary measures by February next year "based on the existing surveys and actuarial calculations".