Regulatory Alerts2014-10-06
Regulation on the additional allocation to the volatility reserve (ZZV)
The Financial Market Authority (FMA) issued this regulation to define the calculation and application of additional allocations to the volatility reserve under the Pensionskassen Act. The rules mandate that these allocations must respect past pension adjustments, yield allocations, and specific interest rate and surplus correlations while ensuring the assumed interest rate is not undercut. The regulation also accounts for security-oriented investment groups and capital market conditions, entering into force on 1 January 2013.
All English translation of the authentic German text serves merely information purposes. The official wording in German can be found in the Austrian Federal Law gazette (Bundesgesetzblatt; BGBl.) Regulation of the Financial Market Authority (FMA) on the additional allocation to the volatility reserve (ZZV; Zusätzliche Zuweisung zur Schwankungsrückstellung) Based on Article 24a para. 3 of the Pensionskassen Act (PKG; Pensionskassengesetz), Federal Law Gazette No. 281/1990, last amended by the Federal Act, Federal Law Gazette I No. 54/2012, the following shall be determined by regulation: General provisions Article 1 The additional allocation to the volatility reserve in accordance with Article 24a para. 3 PKG shall be carried out with due regard to the pension commitments made in the respective investment and risk sharing group. Article 2 In the case of an additional allocation to the volatility reserve, the assumed interest rate must not be undercut. Steady pension adjustments for beneficiaries (recipients) Article 3 The volume of the additional allocation to the volatility reserve shall take the pension adjustments made in the past into account. Steady allocation of yields to beneficiaries (entitled) Article 4. The volume of the additional allocation to the volatility reserve shall take the allocation of earnings carried out in the past into account. Level of the assumed interest rate and amount of the technical surplus Article 5 The volume of the additional allocation to the volatility reserve shall take the positive correlation with the level of the assumed interest rate and the technical surplus into account. Features of the security-oriented IRG Article 6 In the case of a security-oriented IRG pursuant to Article 12a PKG, particular consideration shall be given to the volatility of the technical result when carrying out the additional allocation to the volatility reserve and calculating its volume. Volume of the volatility reserve Article 7 The volume of the additional allocation to the volatility reserve shall take the negative correlation with the level of the existing volatility reserve into account. Capital market situation Article 8 The volume of the additional allocation to the volatility reserve shall take the positive correlation with the level and probability of any reduced yields expected in the future into account. Entry into force Article 9 This Regulation shall enter into force on 1 January 2013.