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The amendments also set out to make contribution schemes more flexible for employers, increase workers' choices on asset allocation, and improve pensioner representation on supervisory boards.
Finance minister, Maria Fekter from the conservative government party ÖVP, said the reform had been a "pressing issue" and would "bring improvements", but she added that it would not be the last reform of the second pillar.
The amendment had been passed with the votes of the two government parties ÖVP and the social democratic SPÖ, which has been sceptical about funded pension schemes and non-state retirement provision.
Pension fund association FVPK welcomed the reform, highlighting the amendment to new entries into existing old contracts with discount rates of 6 per cent or more. In a statement, it said: "The Austrian Pensionskassen system was created in 1991 at a time of high return expectations that today can hardly be fulfilled".
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