The International Monetary Fund (IMF) has urged Austria to increase participation in its second-pillar pension system, describing retirement savings as a “natural entry point” for encouraging households to invest more in capital-market assets.

In its Austria: Staff Concluding Statement of the 2026 Article IV Mission, the IMF noted that only 25 per cent of employees are currently covered by the second pillar.

It specifically said that retirement savings in the second pillar could support a shift to more households investing in cross-border financial assets, while also boosting retirement income.

“For the second pillar to grow sustainably, investment guidelines are critical: products should be low‑cost, well diversified, and predominantly liquid, while allowing modest exposure to private equity and venture capital where consistent with liabilities and risk‑bearing capacity,” the IMF added.

In addition, the IMF also questioned the durability of Austria’s planned fiscal consolidation measures, arguing that current spending restraint relies too heavily on temporary measures rather than long-term structural reforms to pensions and healthcare.

It said the government’s plans focus mainly on “non-parametric measures”, such as temporary changes to benefit indexation.

It comes as last month the Austrian government announced proposals to reform the second-pillar pension system, which was described as a “paradigm shift”.

The government is aiming to make occupational pension schemes more attractive, transparent and efficient for employees, whilst taking the pressure off the first pillar. A key measure is the introduction of a General Pension Fund Agreement, which will significantly broaden access to occupational pension schemes for all employees.

The reform also increases flexibility in how contributions are invested, giving employees the choice between traditional guaranteed products and higher-return capital market–linked options.

In addition, personal contributions to occupational pensions will benefit from improved tax treatment, with supplementary pensions from private contributions set to become tax-free.

Commenting at the time, Foreign Minister, Beate Meinl-Reisinger, said: "This is nothing less than a genuine paradigm shift in pension provision.”

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