AUSTRIA - Fair-Finance, the company launched by former Bonus pension fund head Markus Zeilinger, plans to offer sustainable investment funds and insurance products in the future, alongside the already-announced severance pay fund.

Zeilinger presented his concept for a new betriebliche Vorsorgekasse (BVK) in Vienna today - an offering formerly known as MVK before self-employed were included at the beginning of the year - and confirmed he wants to extend the business of Fair-Finance into the fund market by opening funds in which BVK assets are managed to public investment.

"The time for SRI has come and it is not only a trend but a change in society's values which also moralises financial markets," said Zeilinger.

Zeilinger has recruited Max Deml to the supervisory board,as he is an expert in the field of sustainable investments and creator of several SRI equity indices and adviser to the alternative Nobel prize committee.

Until recently, Deml was a member of the ethical council at the BVK of Austria's largest Pensionskasse, the VBV.

The VBV has a strong focus on sustainable investment itself and has created the SRI index Vönix for the Austrian stock exchange.

Apart from the focus on sustainable investment in his BVK, he wants to offer clients a voice in investment decisions, a return guarantee and a low costs. (See earlier IPE story: New player enters Austrian MVK market)

Zeilinger also wants to branch out eventually to selling insurance products "for a fair price", he noted.

"Insurance premiums are at a quite high level in Austria, compared to Germany for example," he explained. "By finding the right partners, it would be possible to reduce the sales costs."

Günter Hörweg, member of the board and one of 15 shareholders in Fair-finance, formerly managing director of the insurer Wüstenrot's holding company, confirmed offering insurance pension products might be a possible field for Fair-Finance in future.

Money from a BVK can currently be withdrawn after three years but it has to be taxed. If the money is left in the fund until retirement and is then transferred over to a pension insurance product or a Pensionskasse it is tax-free.

The Fair-Finance BVK will be the 10th player on the Austrian severance pay fund market and Zeilinger argued "the other market participants are not very happy about our arrival".

While most market participants argue all potential clients apart from the 300,000 self-employed already have chosen a BVK and will not change to another, Zeilinger disagrees.

"So far, hardly any companies have changed providers because all are offering more or less the same," he pointed out.

"We asked employee representatives if they would negotiate a change of provider in their company if a new fund was available which offered what we do - namely lowest costs, return guarantee and a share in earnings - and the majority said yes," said Zeilinger, quoting results from a telephone poll.

Sustainable investment was named fourth by clients among the criteria for choosing a severance pay fund, according to a study on the MVK market in 2007 by authorised pension expert Roland Emmett.

Safety of investments, aside from the capital guarantee every fund has to offer by law, asset allocation in general and costs were named as the most important criteria.

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

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