OCCUPATIONAL PENSION SCHEME
|OCCUPATIONAL PENSION SCHEME
Expression denoting a pension scheme arranged by employers for the benefit of their own employees, alongside the statutory pension scheme provided for under the General Social Insurance Act (ASVG).
No precise statistics are available on the extent and structure of such schemes in Austria; according to rough estimates, some 10-15% of employees are covered by them (i.e. 300, 000-350, 000, given the annual average figure for the total employee labour force in 1997 of 3, 055, 305). A more precise indication can, however, be given of their comparative use in different sectors of the economy: most of the employees covered work in the banking and insurance sector, but there are also many in the fuel and electricity industries, the formerly nationalized metal industries and the media. In all other sectors occupational pension schemes are the exception, and mainly found in the subsidiaries of multinationals. One other category covered by this form of pension provision are the employees of the social insurance institutions and Chambers of Labour.
According to (again) rough estimates, such schemes contribute only some 4% to current annual expenditure on insuring people against the risks of old age and invalidity. The main burden of old-age pension provision is borne by the state system, which pays for around 93% of all benefits. The reasons for the (still) small share of company schemes in overall pension provision are the relatively high efficiency of Austria's state pension insurance system, the lack (as yet) of adequate tax incentives and the statutory regulation of severance pay as a payment due to the employee in the event of dismissal with notice or any other termination of the employment relationship not involving voluntary resignation or culpable conduct on the part of the employee, thereby fulfilling additional functions which in other national systems are provided for by occupational pension schemes.
There are essentially three basic systems of occupational pension provision: a) direct pension guarantee (direkte Pensionszusage), under which the employer is personally pledged or obliged to pay pension benefits in the event of the circumstances giving rise to entitlement. Such guarantees may either be laid down by an individual contract of employment, works agreement or collective agreement or have their legal basis in the principle of equal treatment (see below), and may exceptionally provide a full pension that includes allowance for the statutory pension but normally provide a supplement to the statutory pension; b) pension assurance via a pension fund (Pensionskassenzusage), under which employers are obliged to pay contributions on behalf of employees into whatever pension fund they have joined or set up themselves for the benefit of their employees. This form of pension assurance may be laid down either by a works agreement or collective agreement or, in the case of executive staff, by individual contract, and may be either earnings-related or contributions-related; c) pension assurance through an insurance company (Zusage der Leistung einer Versicherungsunternehmung), under which the policy-holder is the employer and the insured is the employee. This form is usually based on the individual contract of employment. Up till 1990, when the first statutory regulation of such schemes was introduced by way of the Occupational Pensions Act (Betriebspensionsgesetz) and the Pension Funds Act (Pensionskassengesetz), direct pension guarantee was the most common form. Since then, however, more and more employers have switched to the pension fund formula. The latter has the advantage of transferring to the funds concerned the risk of unforeseeable payment liabilities in the distant future, although this is countered by the disadvantage that the company has smaller reserves of liquid assets available to it in the meantime. Whereas in 1990 only a few hundred empolyees were insured through pension funds, by the end of 1997 this figure had already risen to 180, 000.
The main principles underlying the current statutory regulation of occupational pension schemes are non-forfeiture (Unverfallbarkeit), permitted instances of revocation (Widerruf), the obligation to observe equal treatment, and protection in the event of insolvency.
Non-forfeiture. In the case of direct pension guarantee, prospective entitlements automatically become non-forfeitable after 5 years (extendible to up to 10 years by contractual agreement); this means that employees who leave the establishment in circumstances other than voluntary resignation with notice, summary dismissal on the grounds of culpable conduct on their part or unjustified resignation without notice retain their accrued entitlements to the payments concerned provided that they have been covered by the assurance of a pension under the scheme for 5 (or up to 10) years. In the case of pension assurance by way of a pension fund, on the other hand, prospective entitlements become non-forfeitable as soon as the payment of contributions commences (extendible to up to 5 years after commencement). Only if the capital value of the non-forfeitable prospective entitlements is below a specified limit may an employee be paid lump-sum compensation instead.
Revocation. In the case of direct pension guarantee, pension assurance may lawfully be revoked by the employer only if provision for such revocation has been laid down by works agreement, collective agreement or written agreement between individual employee and employer, there has been a serious deterioration in the company's economic situation and, where a works council exists, the latter has been consulted. Even then, revocation may cancel only the acquisition of any further prospective entitlements: entitlements already accrued are not affected. It is also unlawful to cancel payments due to former employees, even when the company is undergoing serious economic difficulties, although in such circumstances payments may be credited or reduced. Where the assurance of pension payments is based on a collective agreement or works agreement, it may be made less favourable under a later agreement but any such worsening of pension provision is subject to a series of legal restrictions.
Equal treatment. Employers are required to observe the principle of equal treatment in granting the assurance of occupational pensions, i.e. they may not exclude individual employees arbitrarily or on non-objective grounds. In the case of assurance via pension funds, the establishment's employees or employee categories must be afforded a balanced system of membership of the scheme that excludes any arbitrary or non-objective differentiation.
Protection in the event of the employer's insolvency. In the event of the employer's insolvency, former employees who are already recipients of an occupational pension are automatically paid an insolvency guarantee payment amounting to 24 monthly pension payments, while employees not yet in receipt of a pension receive a guarantee payment consisting only of 24 monthly payments based on the non-forfeitable amount. However, the latter have the additional protection of a legal obligation on the employer to provide at least 50% coverage of pension liability reserves by way of securities. In an employer's bankruptcy proceedings these securities constitute a special-purpose asset for settling the claims of employees and former employees with immediate and prospective entitlements. See also career public service pension.))