The number of valid premium-subsidised retirement provision (PZV) contracts has more than halved since the record levels seen in 2012, falling to around 782,000 in the 2024 reporting year, data from Austria’s Financial Markets Authority (FMA) has revealed .

The report showed that the current level of PZV contracts is at the same level as in 2005, when the PZV was introduced, and continues the trend of the PZV market shrinking each year following the “significant” reduction in state subsidies in 2012.

FMA also reported a small increase in the number of new contracts signed during 2024 to 8,077, 634 contracts more than in 2023, equivalent to an 8.4 per cent rise.

However, this increase was not enough to make up for the number of expired or terminated contracts, just like in the past 10 years.

The report also highlighted that PZV, a product with very long maturities, brought in €637m in annual premiums, despite this being 4.8 per cent less than the previous year (2023).

Meanwhile, PZV’s total assets decreased by 0.75 per cent from €8.75bn in 2023 to €8.69bn in 2024.

The report also outlined that, as in the past 12 years, the state premium in 2024 was 4.25 per cent of the premiums paid or net deposits.

This premium includes a fixed portion of 2.75 per cent and a variable portion based on the interest rate for building society subsidies, which ranges between 1.5 per cent and 4 per cent.

Up until 2011, the state provided much higher subsidies, for example, 9 per cent in 2010 and 8.5 per cent in 2011.

The report also found that the maximum deposit eligible for the premium increased slightly from €3,222.18 in 2023 to €3,333.87 in 2024.

As a result, the highest possible state premium in 2024 was €141.86; however, this is still “well below” the peak level in 2009, when the maximum possible state premium was €210.35.

The report also stated that the market for PZV is highly concentrated, with companies in the Vienna Insurance Group collecting more than half of the premium volume.

Additionally, it also revealed that more than half of the premium volume is collected by a single insurance group, which also sells the majority of all new contracts.

It also said that after not selling any new PZV contracts for over 10 years (and with all existing contracts already matured), only four out of the 19 insurance companies that used to offer this product during its peak decided to offer new contracts in 2024.

FMA said the attractiveness of the PZV as an investment and pension product has suffered greatly due to the “significant” reduction in state subsidies in 2012 and the weak investment results in the low-interest rate environment.

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