The Austrian minister in charge of the country's pension fund reforms has told Pension Funds Insider that the suggestionfrom the head of the Austrian Association of Pension Funds (FVPK) for occupational and personal pensions to be considered in an overarching programme of pension reform are likely to be ignored

Dr. Reinhold Lopatka, state secretary of the financial ministry, said that "as the reform commission for the state pension system couldn't agree on recommendations I don't think it would be useful to look at the occupational and private pension systems as well in such a forum."

Andreas Zakostelsky, head of the FVPK, recently said that a reform commission to secure future pensions had to take account of occupational and individual pensions, and that the reform commission should therefore extend its focus to all three pillars of the Austrian system, rather than focus on the state system alone.

"All the indications suggest that the national pension deficit will be significantly higher in 2030 than what it is today. This deficit results from the difference between active incomes and the capacity of the state pension, and better occupational pensions and additional individual pensions will be needed," he said.

Lopatka said that he would welcome an overarching analysis as Zakostelsky recommends, "but a collective solution is unlikely".

Lopatka has been chair of a separate committee looking to reform pension fund (pensionskassen) law for close to two years which should finally see its legislation passed at the end of the year, and said that "with the large number of participants the negotiations in this process were on the long side and as a result I don't think a 'three-pillar reform commission' would be politically practical."

The Austrian system has typically been centred heavily on one of Europe's most generous state pension pillars, which typically provides Austrians saving for all of their working lives with 80% of their final salary.

Many experts warn though that increasing numbers of retired people will threaten that system within the next 20 years as it operates on a pay-as-you-go basis with taxpayers at any given point supporting those claiming a pension.

Zakostelsky had pointed to the European Commission's review of EU pension systems in 2010 as a model to follow in that all pillars were given equal attention in its green book. He urged Austrians: "We need end this one-dimensional thinking in Austria too, as the pensioners of tomorrow will thank us."

Zakostelsky has been strongly advocating for the Austrian government to make offering a corporate pension plan mandatory for businesses, although this has not found universal favour amongst a business community unused to making pension arrangements given the catch-all state pillar.

Lopatka agreed that "occupational pension provision in Austria is going to increase in importance," although he warned the pension fund association that "insurance-based provision and not just the pension funds will have increasing appeal for companies who want to retain important employees for example."

dbillingham@wilmington.co.uk

First published 20.04.11