Paradise for seniors? In Austria, the pension increases by almost ten percent

2023-08-21 22:18:07

Austria’s pensioners have it better. Not only do they retire earlier than their German neighbors and live longer than their neighbors, they also usually receive higher salaries every month. And they will increase by 9.7 percent in the coming year. That’s almost double the current increase in Germany, which gave Germany’s 21 million retirees a 4.39 percent increase in the west and 5.86 percent in the east.

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

But the increase of almost 10 percent determined by the state data authority Statistics Austria is not enough for the Seniorenrat, the lobby of pensioners. Its chairman Peter Kostelka called for a special payment of a few hundred euros for pensioners with monthly payments of between 1400 and 1700 euros.

After all, so the argument goes, the increase will not take effect until the end of January, until then the senior citizens would have to pre-finance the high inflation of currently 7 percent, which is above the German 6.2 percent and the 5.3 percent in the euro area. He gets support from the trade union institute Momentum. This has determined that even after the increase, the average pension fell below the purchasing power level of 2020 by 24 euros.

Germans work longer for a lower pension

The range of 1,400 to 1,700 euros given by pension lobbyist Kostelka as a reference for necessary co-payments gives an indication of the average amount of the statutory pension in Austria, which according to the Vienna government last year reached 1,192 euros a month for women and 1,917 euros for men. According to the federal government, the corresponding values ​​in Germany after 45 years of insurance are 1323 euros per month for women and 1637 euros for men.

However, German pensioners work longer for their lower pension. In Austria, the standard retirement age is 60 for women and 65 for men. Only from next year will it be gradually adjusted to a uniform standard age of 65 by 2033. In Germany, women and men are already working longer. For everyone born after 1964, the regular retirement age is 67 years.

In reality, however, many Austrians also take the opportunity to leave the world of work early. According to the economic research institute WIFO, men actually retire at the age of 63.3. In Germany, too, very few work until the statutory retirement age, but stay in the job longer: in 2021 the actual retirement age was 64.1 years. The fact that the life expectancy for today’s 60-year-olds in Austria, both men and women, is a few weeks higher than in the neighbors in the north and thus increases the value of the pension should not be ignored.

The increase in pensions is out of the question before the upcoming National Council elections in 2024, and yet there is a debate about it. Because it burdens the state budget with 5.3 billion euros. Together with the parallel increase in civil servants’ pensions, which according to the Ministry of Finance amount to an average of 3,100 euros a month, the additional expenditure climbs to 6.4 billion euros, according to the opposition.

Against this background, the liberal Neos have demanded that the one-off payment that pensioners received in March to compensate for the high inflation and which burdened the state budget with 650 million euros should be offset. The incomes of pensioners have risen more sharply than the incomes of those in employment in recent years, which is inexplicable and unfair.

Ole Kaiser Published/Updated: , Recommendations: 46 A comment by Dietrich Creutzburg, Berlin Published/Updated: , Recommendations: 125 Enzo Weber Published/Updated: , Recommendations: 5

One reason for this lies in the way the increase in pensions is calculated. It is based solely on the average increase in the cost of living from July of the previous year to June – other state social benefits will increase by 665 million euros from January to the same extent. Economists like Christine Mayrhuber from WIFO believe that a different calculation formula is necessary in addition to a reform of the pension system, which still puts women at a disadvantage and can hardly be financed in the long term. Simply using general inflation as an indicator for pension increases is not enough.

With 23.9 billion euros, around a quarter of the federal budget is already going into old-age security this year, including the protection of pay-as-you-go pensions. According to government-appointed experts, the proportion of Austria’s gross domestic product that is accounted for by annuity and pension payments is growing from year to year – from the current 6.04 percent to 6.73 percent in four years.