EcoAustria on the government program 2025-2029: Pension reform falls short
Prof. Dr. Monika Köppl-Turyna
Director
The 2025-2029 government program of the new three-party coalition, which was sworn in this morning, aims to achieve savings in the Austrian pension system through various measures. Specifically, a savings path is being pursued which, together with an employment package for older people, is intended to achieve EUR 1.45 billion in 2028 and EUR 2.9 billion in 2031.
If these savings are actually realized, this can help to relieve the budget in the short term. By way of comparison: while the actual retirement age for men is currently around three years below the statutory retirement age (of 65), retiring one year later would reduce payments by around EUR 3.5 to 4 billion. However, existing analyses, such as the Medium-Term Report of the Pension Commission and the Debt Check by EcoAustria, show that pension expenditure, which is high by international standards, will increase significantly in future due to demographic developments.
One measure adopted is to make access to the corridor pension more difficult by increasing the minimum retirement age from 62 to 63 and the required years of insurance from 40 to 42. Empirical studies show that stricter access requirements do indeed have a significant impact on the actual retirement age. Such a measure can therefore help to reduce pension expenditure in the short term and increase the supply of labor at the same time.
"In the long term, however, the impact on the financial sustainability of the pension system is extremely limited. As a later start to the corridor pension is associated with lower actuarial deductions, the financial effects are largely compensated for. A more comprehensive reform, such as a rule-based adjustment of the statutory retirement age, would therefore be a much more effective approach to securing the pension system in the long term," demands EcoAustria Director Monika Köppl-Turyna.
It should also be questioned whether only the corridor pension, where the deductions are already relatively balanced, should be adjusted. There are currently no indications that access conditions are to be tightened in the case of the heavy work and long-term insurance pensions, which are subject to lower deductions.
In addition, a sustainability mechanism is to be implemented that provides for mandatory measures if targets yet to be determined are not met. However, the corridor pension is to be adjusted from 2035 onwards. Further measures would only be implemented at a later date. There is still no comprehensive reform of the pension system.
Overall, it remains to be seen how the measures will be designed in detail. One thing is certain: An increase in the statutory retirement age is a much more effective measure for securing the Austrian pension system in the long term. One option is to automatically link this to rising life expectancy - an approach that has already been implemented in several OECD countries such as Denmark and Finland.
"Although the announced savings are a step towards financial consolidation, they do not solve the fundamental challenges of the long-term sustainability of our pension system," Köppl-Turyna concludes.
