As of: March 7, 2024, 12:34 p.m
By: Amy Walker
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Press
Split
A reform of the pension system based on the Austrian model?
This is what the Labor Minister now has in mind.
The pension system in the neighboring country was reformed decades ago.
Berlin – Social Minister Hubertus Heil (SPD) is currently making headlines with a new push for pension reform: “We will also discuss in Germany how we can include other groups in the protection of the statutory pension insurance in the long term,” said Heil on Wednesday, June 6th. March, the television channels
RTL
and
NTV
.
Specifically, he is thinking about a system modeled on Austria, where self-employed people and civil servants have been paying into the statutory pension fund since 2005.
This is one of the reasons why Austrian pensioners also have a higher pension in old age.
But the system also has huge problems.
Civil servants and the self-employed pay into the pension fund
First of all, the basics: In Austria there is a system that is often understood in this country as “citizens’ insurance”.
All Austrians pay into the same pension system; there is no separate pension fund for civil servants.
This naturally increases pension insurance income.
In 2022 there were around 200,000 civil servants in Austria - in Germany this number is significantly higher at 1.7 million.
If all of these people paid into our pension insurance, it would significantly increase our income.
What also increases the income of the Austrian pension fund: In Austria, contributions to pension insurance are also higher at 22.8 percent.
In Germany, insured people pay 18.6 percent of their gross wages into pension insurance.
These contributions will also increase in the next few years; from 2028, the federal government assumes that insured people will have to pay in over 20 percent.
These two factors essentially mean that Austrians’ pensions are significantly higher.
On average, pensioners in the neighboring country receive a good 400 euros more in pension, i.e. 1,900 euros every month.
There is also Christmas and holiday pay, i.e. 14th salary per year.
In Germany, the average pension is around 1,500 euros, 12 times a year.
In addition, pensioners in Austria are allowed to retire earlier: men are ready at the age of 65, while the retirement age for women is currently being gradually raised from 60 to 65.
In Germany, the entry age will be raised to 67 by 2031 - regardless of gender.
Women are disadvantaged when it comes to pensions in Austria
However, not everything is perfect in the neighboring country.
A key factor that leads to higher pensions, but also has major disadvantages, is the fact that in Austria you have to have paid into the pension fund for at least 15 years in order to get anything at all.
In Germany you are entitled to a pension after just five years.
A scenario is conceivable in which you pay 22.8 percent of your salary to the social security fund every month for 14 years and get nothing in the end.
This particularly affects women who do not (or cannot) work while raising children.
In Germany, these child-rearing periods are counted in the pension system, but not in Austria.
Federal Labor Minister Hubertus Heil wants to “stabilize the statutory pension in the long term”.
(Archive photo) © Britta Pedersen/dpa
Austrians also have to pay tax on their entire pension; in Germany there is still a grace period: depending on when you retire, there are tax allowances in this country.
For example, anyone retiring this year will only pay taxes on 83 percent of their pension.
The entry tax rate in Austria is 25 percent, which is higher than in this country and therefore also affects pensioners, as
your pension provision
describes.
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Austria converted its pension system to its current form 20 years ago, a lengthy and, above all, expensive process.
Due to the high pensions, the topic of company and private pension provision is less important, but economists criticize this.
In Austria, too, the pension fund is under pressure due to demographic change; government spending will also grow significantly there if other pension provision models are not switched to.
If the system were to be restructured in Germany now, it would be similarly expensive and time-consuming - but reforms would have to be carried out quickly in order to secure the pensions of the baby boomers who will soon be retiring.
The idea of such a reform has been circulating in Germany for a long time; it is particularly familiar from the election programs of the SPD, the Greens and the Left.
However, they have always lacked the majority for implementation; the CDU and FDP have categorically rejected reforms in this direction for years.