Austrian companies not obliged to offer pension plan choice, experts say

Austrian companies will be under no obligation to offer workers a choice of pension plan, according to the University of Vienna’s Robert Rebhahn, an expert on social law.

As part of the most recent overhaul of the law governing Austrian Pensionskassen (PKG), members were given the right to choose from among various forms of pension plans such as Pensionskasse and insurance-based Betriebliche Kollektivversicherung (BKV).

It remained unclear, however, whether employers were obliged to offer this choice, or whether the law only applied in cases where the occupational pension plan was designed to include both options.

In an article in the legal magazine Wirtschaftsrechtliche Blätter, Rebhahn said there was no obligation for employers to offer a choice.

Andreas Zakostelsky, chairman of the Austrian pension fund association (FVPK), said: “This means there is now legal clarity on the subject.”

Rebhahn is the second legal expert to arrive at this interpretation of the law after pension and legal expert Wolfgang Mazal published an article with a similar conclusion in December 2012.

Both Rebhahn and Mazal stress there is no legal basis to sue employers for compensation if a company offers a Pensionskasse but no BKV plan.

Over the last two years, there has been much uncertainty among employers and employee representatives on the subject.

The legal experts explained that, in Austria, a company pension plan is a voluntary supplementary benefit offered by the employers.

It is therefore free to choose the design, they said.

In other news, two independent surveys are looking into how the new first-pillar pension benefit information sheet, the Pensionskonto, will change Austrians’ view of supplementary retirement provision.

Since late last year, the social insurance bodies (Sozialversicherungen) have been sending out letters to members with a calculation on how much monthly pension each employer would receive if they stopped working now and retired at 60 (for women) or 65 (for men).

It is the first time Austrians have received an official calculation of their future pension benefit from the first pillar.

According to a survey by insurer Uniqa, Austrians still greatly underestimate the ‘pension gap’, i.e. the difference between final income and the first-pillar pension.

A different survey by the Erste banking group showed that only 18% of Austrians understood how the Pensionskonto worked, while 41% had heard of it and 35% said they were unfamiliar with the term.