Complementary pensions (Voluntary)
Regulatory Framework
2018: Pension Companies Act; Transposition of IORP II Directive.
2016: Insurance Supervision Act; regulates the establishment, operation and supervision of insurance companies.
2006: Regulations relaxing investment limits for Pensionskassen were passed.
2005: Pension Companies Act; Transposition of IORP I Directive.
2004: The Harmonisation of Austrian Pension Systems Act reformed the state pension system.
2002: The Act on Corporate Staff Provision (amended in 2006) introduced the new severance pay system. It regulates the setting-up and management of staff provision funds (investment limits, capital requirements).
1990: Company Pensions Act; authorizes different types of plans, regulates minimum requirements concerning vesting and transferability of accrued rights and prohibits arbitrary discrimination in coverage.
1990: Pension Companies Act; regulates the establishment, operation and supervision of single and multi-employer pension funds, includes rules concerning asset management, minimum funding and accounting.
1988: Income Tax Act; sets limits to plan design by regulating the taxation of contributions, investment income and benefits and defines financial rules for book reserve plans.
Plan Profile
Plan sponsors
Types of plans
Institutional Framework
Pension funds: Pension funds manage the contribution and benefit administration. Pension funds are independent legal entities separate from the sponsoring employer(s). They must take the legal form of joint-stock companies and must have their headquarters in Austria.
The Financial Market Authority (FMA) must be notified if a shareholder of a pension fund holds more than 10 per cent of the share capital. It must also be notified if a shareholder holding more than 10 per cent of the share capital increases its participation to more than 20 per cent, 33 per cent or 50 per cent respectively. The FMA may take appropriate measures if such participation has an adverse impact on the soundness of the pension fund administration.
Each pension fund must have a supervisory board consisting of at least five members in the case of single employer funds and of between 10 and 22 members in the case of multi-employer funds. Members of the board of directors must not have any criminal record or be subject to any criminal investigation. The appointment of members of the board of directors is subject to the approval of the FMA.
Members of the board of directors of a single employer pension fund are required to hold a management position with the sponsoring employer. The directors of a multi-employer pension fund must prove professional experience in the area of pension fund management, banking or insurance and must have been in a management position for at least three years.
A board of directors consisting of at least two members is responsible for the daily management of the pension fund.
Unless regulated differently in the articles of association, the representatives of the fund shareholders must outnumber the representatives of the fund members (legally defined as employees covered by the plan, former employees receiving pension benefits from the fund, persons receiving widow pensions and persons with deferred pension rights) by two in the case of multi-employer funds and by one in the case of single employer funds.
A consultative committee, consisting of an equal number of representatives of the fund management and of fund members, may be established within a pension fund. The consultative committee has the right to obtain certain information and to make proposals to the supervisory board.
Direct insurance: The life insurance company manages the contribution and benefit administration.
Occupational group insurance: The life insurance company manages the contribution and benefit administration.
A consultative committee consisting of four members may be established, with the right to obtain certain information and to make proposals to the supervisory board.
Book reserve: The sponsoring employer manages the contribution and benefit administration.
The company's work council has the right to obtain information and to control the partial external financing (see section on Protection of rights - subsection on Financial and technical requirements / Reporting).
Support funds: Support funds are legal entities separate from the sponsoring employer.
There are no further regulatory restrictions.
Coverage
All plans: Private-sector employees.
The self-employed may only contribute on their own behalf if they employ at least one employee for which they sponsor or co-sponsor a pension plan implemented through a pension fund. Civil servants and public-sector employees may only be covered by a pension plan implemented through a pension fund.
A Federal Pension Fund covers civil servants and public workers working for the federal government. Many local governments have also established pension funds.
Discrimination in coverage is prohibited if it is based on arbitrary criteria such as, for example, gender. The number of hours worked is not considered an arbitrary criterion as such and the coverage of part-time workers depends on plan rules.
Financing / Investment
Sources of funds
Employee contributions
Employer contributions
Other sources of funds
Methods of financing
Asset management
Benefit provisions
Acquisition and maintenance of rights
Waiting period
Vesting rules
Preservation, portability, transferability
Retirement benefits
Benefit qualifying conditions
Benefit structure / formula
Benefit adjustment
Survivors
Disability
Protection of Rights
- Business plan (contains the actuarial basis);
- The members of the board of directors who must be sufficiently experienced and of good character;
- The actuary (every pension fund must employ an actuary);
- The independent auditing actuary (who is responsible for examining annually whether the business plan is being correctly implemented);
- The annual accounts.
If the pension rights are at risk, the FMA may take any necessary action to secure these rights.
In order to compensate potential investment losses, every pension fund has to accumulate a volatility reserve which must be between 10% and 25% of the pension liabilities and is financed by a part of the employer contributions.
The minimum funding requirement corresponds to the accumulated benefit obligation. In the case of underfunding, the employer is obliged to secure appropriate funding within a period of ten years.
If a plan is wound up, the assets of the pension fund which cover the pension liabilities of the fund must be used to satisfy the pension claims of the members. Should these assets not be sufficient to satisfy all pension claims, these claims prevail over all other claims with respect to all additional assets of the pension fund. There is no legal requirement of insolvency insurance and there is no state guarantee fund.
Direct insurance: The protection of rights is mainly secured through the supervision of insurance companies by the FMA - Financial Market Authority.
The powers of the supervisory authority, the minimum funding requirement and the protection in the case of insolvency are similar to those which were given above for pension funds.
Book reserve: There is no supervisory authority for book reserve plans. The company work council has information and control rights.
The company does not have to insure the pension rights of the members of the pension fund and no state guarantee fund exists. However, a partial funding requirement applies. At least 50% of the book reserves must be invested in EU company or government bonds or in investment funds that include only EU company or government bonds in their portfolio denominated in EURO. In case of insolvency of the employer, these assets are solely used to satisfy pension claims and must not be used to satisfy any other claims.
Consequently, merely 50% of the benefit value is protected in the case of insolvency. Moreover, the payment of one-half of the benefits can be interrupted by the employer if this is allowed by the pension plan or if a continuation of payment would endanger the existence of the company.
Support funds: No legal rules. No legally enforceable right to benefits.
All plans: No legal provisions for resolving complaints or disputes between plan members and the plan management. Civil courts must decide on disputes if these cannot be solved through private settlements.
Protection of Assets
Financial and Technical Requirements / Reporting
Whistleblowing
Standards for service providers
Fees
Winding up / Merger and acquisition
Bankruptcy: Insolvency Insurance / Compensation Fund
Disclosure of information / Individual action
Other measures
Tax Treatment
Taxation of employee contributions
Taxation of employer contributions
Taxation of investment income
Taxation of benefits
Financial Market Authority (FMA): Supervises pension funds, insurance companies and other financial service providers.
If pension rights are at risk, the FMA may take necessary actions to secure these rights.
The FMA carries out supervision through ex ante, current and ex post supervisory actions:
- ex ante: approval of technical provisions of pension funds and insurance companies;
- current: expert consultations, on-site inspections, withdrawal of authorization, enforcement of fit and proper requirements;
- ex post: analysis of yearly balances and of quarterly investment reports.
The FMA is financed mainly through levies on supervised entities.
Finanzmarktaufsichtsbehörde
Otto-Wagner-Platz 5
1090 Wien
Austria
Tel.: (+43) 1 24 959 2005/2005
Fax: (+43) 1 23 959 2099/2199
Internet: http://www.fma.gv.at
Federal Ministry of Finance: Supervises the tax rules for book reserve plans.
Bundesministerium für Finanzen
Himmelpfortgasse 5
1010 Wien
Austria
Tel.: (+43) 1 514 33
Internet: http://www.bmf.gv.at
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