Assets under management (AUM) of Austrian pension funds fell by 9.8% in the first quarter of 2020 to € 21.9bn, compared to €24.3bn in the last quarter of last year, mainly due to equity losses as a result of the COVID-19 pandemic, according to a report by the Financial Market Authority (FMA).
At the end of 2019, total assets managed by company pension schemes amounted to 6.1% of Austria’s GDP.
AUM declined by 5.5% quarter-on-quarter in Q1 to €1.9bn for company pensions, and fell by 10.1% for multi-employer pension providers, or überbetriebliche Pensionskassen, to €19.9bn.
“The result is bad, but the measures taken by central banks have had an impact, even though now [the situation] is very volatile,” Gerald Moritz, managing director of Moritz Consulting, told IPE.
According to the Österreichische Kontrollbank, a credit institute that records quarterly pension funds’ performance, company pension funds saw a returns decrease of 5.9% in Q1, while the performance for multi-employer pension providers fell by 10.4%.
Company pension funds’ equity exposure was lower than that of the multi-employer pension providers, but more importantly, company pension funds’ real estate exposure was higher than that of multi-employer pension providers.
This is an “essential reason” why Q1 performance figures were substantially better for cpmany pension funds, Moritz said.
On average, the performance for pension funds over the past three years was -0.4%, in the past five years 0.4%, and for the past 10 years it was on average 2.9%.
Returns on investments fell by 10% in the first three months of 2020, while over the past 10 years an annual performance of 2.9% was achieved on average, according to the FMA report.
Pension funds hold the largest portion of their asset portfolios in bonds (44.03%). Equities make up 29.8% of their asset mix, with 5.42% in real estate. Pension funds manage 96.36% of their assets indirectly through investment funds.
The allocation to equity fell by 4.37% in the first quarter of 2020, while bonds saw a minor increase of 0.72%, and real estate assets of 0.73%.
“I think the question is the duration of the bond portfolio, so far longer duration has brought positive results but there is also fear of inflation scenarios, and the equity market has partially improved,” Moritz added.
The number of participants entitled to pension benefits rose by 0.6% to 874,000 quarter-on-quarter in Q1, with 112,000 people, or 11.4%, already receiving pension benefits from company pension schemes.
Five multi-employer pension providers and three single company pension schemes manage the total amount of assets for the country. The number of pension funds has decreased in the last two decades, from a total of 21 in 2005 to eight in the first quarter of 2020.
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