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Austria's Pension System Considers Misrepresented Figures, Claims Senior Citizens' Association President
President of Austria's Senior Citizens' Association, Ingrid Korosec (ÖVP), has contested the circulating figures in the ongoing pension debate, asserting that they are incorrect. Austria operates a pay-as-you-go pension system, with current contributors funding current pensions. Due to insufficient contributions, the government must annually inject funds into the system.
Last year, state subsidies to the pension system totaled 32.8 billion euros, accounting for almost a third of state revenues, according to the Pension Security Commission. However, Korosec argues that the "real pension costs" are approximately 25% lower, amounting to 25 billion euros.
A question has arisen regarding the inclusion of supplementary allowances in pension costs. The 84-year-old Korosec excludes eight billion euros worth of social benefits and anti-poverty measures from the pension costs, although part of this lies in a semantic debate. Korosec also does not regard the supplementary allowance for minimum pensioners, which totaled 1.3 billion euros last year, as pension costs.
Korosec cautions against alarmism, stating that it generates massive uncertainty among both young and old. She warns of a dangerous spiral, in which young people's waning willingness to work due to perpetual messages about the unaffordability of pensions could lead to decreased contributions and an increased risk of old-age poverty. This, she says, jeopardizes the pay-as-you-go system principle.
"The story has gotten out of hand," remarks budget expert Gabriel Felbermayr, echoing economists advocating for a sustainable system overhaul. Experts like Felbermayr and Fiscal Council President Christoph Badelt propose gradually increasing the statutory retirement age, such as to 67 years.
If the projected subsidies to the pension system continue rising, as predicted by the Pension Security Commission (from around 6.6% of GDP currently to 7.2% by 2035), these measures would only yield savings until 2037, according to calculations by the NEOS Lab.
Korosec considers the debate over the statutory retirement age to be outdated and ungenerous. She proposes age-appropriate workplaces and a flexible retirement age, where the duration and nature of employment are decisive, instead of an arbitrary age limit. Korosec asserts that her approach would make Austria's retiring workforce more reflective of those in Sweden and Denmark, where only 22% and 25% of 55- to 64-year-olds, respectively, retire.
According to general knowledge, Austria's pension system primarily comprises statutory pension insurance, supplementary allowances, and social benefits tied to pensions. The system is funded through significant social insurance contributions emphasizing solidarity. However, specific financial data breakdowns, such as the proportion of supplementary allowances and social benefits, are not provided in the current search results.
The ongoing debate about Austria's pension system involves not just statutory pension insurance, but also supplementary allowances and social benefits tied to pensions, as suggested by general knowledge. President of Austria's Senior Citizens' Association, Ingrid Korosec, has excluded eight billion euros worth of social benefits and anti-poverty measures from the pension costs, arguing that they are not part of the pension costs in the financial data breakdown.
