Better Finance - Country Case: Austria

With some 90 percent of the average retirement income received from a public pension entitlement, the Austrian system of old age provision is very concentrated on the first pillar. Occupational pensions are primarily offered through pension funds and insurance companies. Direct commitments are an alternative vehicle, but their usage stagnates. The opportunity to offer defined contribution plans through pension funds and insurance contracts has certainly boosted the spread of occupational pensions in Austria. While occupational pensions have become more popular over time, low interest rates and high liquidity preference dampened demand for individual life insurance contracts. Over the years 2002 through 2018 the performance of pension funds in real net terms has been positive, with an annualised average return of 0.9 percent before tax. The life insurance industry follows a distinctly more conservative investment policy and achieved an average real net rate of return before tax of 2.2 percent annually.