FECIF Editorial | April 2026

Across Europe—and especially in Austria—the demographic clock is ticking loudly. Societies are ageing at a pace that challenges the financial sustainability of national pension and healthcare systems. By 2035, more than a quarter of Austria’s population will be 65 or older, while the working‑age population continues to shrink.

For financial advisers and insurance intermediaries, the message is unmistakable: private and workplace pension provision must play a much stronger role in the future security of European citizens. And one of the most effective tools to unlock this shift is already well known—smart, well‑designed tax incentives.

This editorial summarises the key insights from AFPA’s (Austrian Financial & Insurance Professionals Association) comprehensive analysis on how tax‑advantaged pension solutions can reduce state burdens, stimulate private responsibility, and close long‑standing protection gaps.

1. Austria’s provision Gap: High property cover, low personal protection

The AFPA study on “Mature consumers and their access to insurance and financial services” reveals a striking imbalance. Austrians over 55 are well insured when it comes to property, liability, and legal protection—but personal lines tell a very different story:

• Home insurance: 91.8%

• Liability: 75%

• Life insurance: 40.8%

• Private health insurance: 32%

• Personal pension: 23.7%

• Long‑term care insurance: just 3.4%

The low uptake contradicts the strong interest expressed by consumers. Older households want private health cover, long‑term care solutions, and even funeral cover. Yet they cite:

• Lack of suitable products (67.3%)

• Age‑related discrimination (70.6%)

• High premiums or unattractive pricing (74.4%)

In an ageing society, this mismatch between intention and uptake is not only worrying—it is financially dangerous.

2. A cautionary tale: The decline of Austria’s state‑aided PZV

The „Prämienbegünstigte Zukunftsvorsorge (PZV)“ - a state-subsidised private pension, once represented Austria’s flagship tax‑advantaged pension product. But the 2012 austerity package cut state contributions in half. By 2024:

• State subsidy share fell to 4.25%, max EUR 141.86

• Number of PZV policies dropped from 1.64 million (2012) to 782,000 (2024)

• A decline of over 54% in just 12 years

The lesson is unmistakable: when tax incentives vanish, so does consumer participation.

Beyond reduced subsidies, the product suffered from high costs, complexity, and limited return potential due to its capital guarantee. Advisors often found it difficult to recommend.

AFPA’s conclusion is clear: do not reform the PZV—replace it with a modern, transparent, efficient model built on international best practice, such as:

• Tax‑efficient funds

• ETF‑based retirement portfolios

• Pension savings accounts aligned with EU’s upcoming Savings and Investments Union (SIU) framework

3. Learning from Europe: The Netherlands as a role model

Austria’s workplace and personal pension assets equal just 5.5% of GDP. In the Netherlands, the figure is 147%.

What explains the gap? Dutch advantages include:

• Full tax deductibility of contributions

• No wealth tax on securities held in pension accounts

• Compulsory employer–employee workplace pension system

• High share of equity investments in pension funds (over 50%)

Meanwhile, Austria taxes personal pension savings twice:

1. Contributions are paid from taxed income,

2. Returns are taxed again during payout.

This double taxation is rare in OECD countries—and it discourages long‑term saving.

4. A Fairer System for Women: Pension Gaps and Poverty Risks

The gender pension gap in Austria is severe:

• Women receive 41% less pension than men

• Austria ranks among the four worst OECD countries

Longer career interruptions (e.g., 8.4 years vs. 5.6 for men), part‑time work, and unequal pay compound the problem. Tax‑advantaged pension schemes - especially employer‑financed ones - help significantly because contributions are flat per employee, not proportional to income.

Making tax incentives stronger therefore contributes directly to reducing inequality and pensioner poverty.

5. The power of workplace pensions: Zukunftssicherung as a scalable solution

   Austria’s Zukunftssicherung (Sec. 3 Para. 1 15a EStG) already provides a functioning tax‑free workplace pension framework:

• Employer contributions up to EUR 300/year are fully tax‑ and social‑security‑free

• Employee contributions via deferred compensation are tax‑free (though subject to social contributions)

But the limit of EUR 300 has not been adjusted since 1975. Inflation has eroded its effect dramatically.

→ AFPA therefore proposes:
Increase the tax‑free allowance from EUR 300 to at least EUR 1,200 per year.

With 635,000 existing policies, modelling shows:

• Social security savings: from EUR 16.7M → 57.9M

• Income tax savings: from EUR 47.3M → 163.7M

• Total combined relief: from EUR 78.4M → 271.3M annually

These are powerful incentives - for both employers and employees.

6. Long‑term impact: Billions in private capital, higher retirement income

If current policies are upgraded to EUR 1,200/year, AFPA simulations estimate:

• EUR 22.4 billion in accumulated pension assets by retirement

• An average lifelong supplementary pension of EUR 135/month

• For younger workers starting early: up to EUR 304/month

This is substantial - especially compared to Austria’s average statutory net pension of approx. EUR 1,800.

Even modest additional participation (e.g., +10%, +25%) significantly boosts national savings, reduces poverty risk, and improves macro‑financial stability. 

7. Why tax incentives work - and why they are needed now

AFPA’s research, supported by studies from Sparkasse (2025) and Raiffeisen (2025), shows:

• 83% of Austrians believe early retirement planning is essential

• 79% support strong government incentives for the third pillar

• 50% explicitly see tax relief as a decisive motivator

Moreover:

• Tax incentives lower immediate labour costs

• They encourage capital formation without bureaucracy

• They reduce future government expenditures on pensions

• They strengthen long‑term financial stability

• They support equality (especially for women with lower earnings)

Put simply: tax incentives trigger behavioural change - quickly and effectively. 

8. AFPA’s key policy recommendations

AFPA calls for targeted, realistic reforms that can be implemented without creating new bureaucratic structures:

1. Increase the Zukunftssicherung allowance to EUR 1,200/year

To restore inflation-adjusted value and strengthen workplace pensions.

2. Introduce tax‑free allowances for:

• Securities and investment funds

• Life and pension insurance products

3. Establish modern pension accounts or portfolios

Aligned with EU SIU and Dutch best practice - tax‑advantaged, transparent, and long‑term focused.

4. End double taxation of personal pension provision

Bring Austria in line with international standards.

Conclusion: A Win‑Win‑Win for Citizens, the State, and the Financial Sector

The demographic shift is inevitable. The question is whether Austria - and Europe - respond proactively or allow pension gaps and poverty risks to widen.

Tax incentives offer a pragmatic, proven, and immediately implementable solution:

• Citizens gain affordable access to meaningful retirement savings.

• The State reduces long‑term pension and social‑assistance burdens.

• Advisers and intermediaries gain stronger tools to provide high‑quality, future‑oriented guidance.

• Society benefits from reduced poverty risk, greater financial stability, and intergenerational fairness.

In a world where private provision becomes indispensable, tax policy becomes social policy. And financial advisers hold a key role in ensuring that people make informed, sustainable decisions about their future.

By Michael Herzhofer, BA MA
Chairman of AFPA and Managing Director of the Secura Group
Learn more about AFPA at AFPA’s official website.

You can find the flyer about this topic HERE …

As a broker, it is important to me to protect people against existential risks. I see myself as a companion to our clients, whom we advise comprehensively depending on their life situation and provide with the necessary products and services. Why should this no longer be possible just because a client has crossed an arbitrary age threshold? I sincerely hope that policymakers and the business community will soon rethink this!

As chairman of AFPA, I not only criticize age-based discrimination, but also want to highlight the economic dimension. The independent financial advisors and insurance intermediaries we represent aim not only to fulfill a socially important role (comprehensive advice and protection), but also to seize market opportunities. And right now, there is plenty to be done.

Our goal is to create a win-win-win situation:

• A solution to a societal challenge (long-term protection against old-age poverty)

• Effectively closing protection gaps

• The state initially forgoes tax revenues but benefits in the long run!

• Better market opportunities for advisors and intermediaries

Finally: The problems documented in Austria exist in all member countries of FECIF, as a consequence of Europe’s demographic developments.