Commissioned by: Better Finance – The European Federation of Investors and Financial Services Users
With around 90 percent of the average retirement income received from public pension entitlements, the Austrian pension system
is very reliant 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 option for defined contribution (DC) plans with
favourable tax treatment offered either by pension funds or insurance companies boosted the prevalence of occupational pensions
in Austria. While occupational pensions have become more popular over time, low interest rates and a high liquidity preference
dampened demand for individual life insurance contracts. Over the years 2002 through 2022, the performance of pension funds
in real net terms has been positive, with an annualised average return of 0.3 percent before tax. The life insurance industry
followed a distinctly more conservative investment policy and achieved an average annual net real return before tax of 1.4
percent.
