By Ilonka Oudenampsen
Austria’s parliament today adopted an amendment to the Pension Fund Act, which will offer the possibility of a minimum guaranteed pension and more saving options for employees, while increasing the overall attractiveness and long-term security of occupational pensions.
The amendment provides legal security for 800,000 Austrians with an occupational pension and opens the door to corporate pensions for another 3.2 million Austrians, said the Austrian Association of Pension Funds who welcomed the parliament’s adoption of the amendment.
When the Austrian pension system was created in 1991, interest rates were agreed upon which suited the high return expectations and market conditions of the time. The amendment makes it possible to agree on market-driven interest rates, which are more suitable for the current economic climate.
DC plan members will be able to opt for a new security model and thereby secure a guaranteed pension that cannot fall below a certain level. Members will also be able to opt for life-cycle funds that suit their risk profile and lifestyle better.
“What matters now is that the occupational pension funds were now given the legal opportunity to meet these customer demands,” chairman of the Austrian Association of Pension Funds Andreas Zakostelsky.
The association added that the amendment provides new benefits to all groups, as workers will benefit from flexible versions of pension provision and companies can customise the design of their scheme and contributions to suit their company and the economic situation, while pensioners have not only the possibility of the security model, but also enhanced participation on the trustee boards of pension funds.
In addition, the rights to information are extended, which enhances the transparency of the system and further increases the comparability of different providers.