The government decides to increase the pension – Austria

As announced, the government approved an increase in pensions for next year in the Council of Ministers on Wednesday. Small pensions get a higher percentage.

For Finance Minister Gernot Blümel (ÖVP), it is a “question of justice”, as he stressed. Social minister Rudolf Anschober (Greens) said a boost was being given to people “who really need every euro urgently”.

Small pensions of up to 1,000 euros will be increased by 3.5 percent, and the compensatory allowance will also be increased to 1,000 euros. Up to a pension amount of 1,400 euros, the adjustment to the inflation value of 1.5 percent will be reduced. This legally foreseen increase is available up to a pension of 2,333 euros, above a fixed amount of 35 euros.

Anschober countered the criticism that older people actually had nothing to do with the crown crisis by saying that you should not “divide the generations” in this situation. He sees it the same way, Blümel agreed, anything else would not have been fair, because a third of pensioners do not benefit from the latest tax reform. Ultimately, the increase should also contribute to increasing purchasing power.

The ministers are reassured that the chairman of the old-age insurance commission, Walter Pöltner, has warned against undermining the insurance principle because people who have paid more contributions will receive a smaller pension increase. Some said it was too much, others that it was too little, that was an indication that one was right, Blümel said.

In the coming months an intense dialogue will be held with the commission on the medium and long-term safeguarding of the entire system, Anschober recalled. It is also the responsibility and task of Pöltner to analyze carefully here.

IHS chief Martin Kocher is skeptical about the pension increase decided by the government on Wednesday. In total, the adjustment is above the inflation rate and therefore costs more than what is actually required by law. “Naturally, it increases the pressure on long-term financial viability,” Kocher told reporters on Wednesday. The concerns also come from the chairman of the government’s pension commission, Walter Pöltner.

“There will have to be a pension reform,” Kocher emphasized. He warned against the “illusion” of being able to finance the pension system by increasing the number of insured. This has been successful in recent years thanks to immigration and more women in the labor market, but: “At some point we will see that demographics will no longer be enough. Then it will be too late for reform.”

Pöltner is again skeptical about the current increase in pensions, that is, because smaller pensions increase by as much as 3.5 percent, while those who receive higher pensions do not even receive compensation for the rate of inflation. “Politicians have the idea that behind every little pension there is a poor person,” said Pöltner. In fact, very small pensioners often have other income as well. Additionally, he sees the principle of long-term jeopardized insurance, according to which higher payments would also result in higher pensions. “As a single measure, everyone can handle it, but not if it happens every year.”

The real purpose of the press conference was to present a study on behavioral economic incentives in the pension system. The so-called “push” is based on psychological tricks rather than prohibitions and aims to motivate certain behaviors, in this case to withdraw later. The IHS suggests not only showing how much early retirement costs, but also how much it would bring to continue working until age 68. Furthermore, the neutral “runner’s pension” could be called a “discount pension”. And “aged” photos of the software on the pension statement could motivate the insured to think about an additional retirement provision.

The study was carried out by the IHS on behalf of the “Generational Justice Action”, an association founded a few years ago in the context of the Cartell Association and the ÖVP, which among other things advocates a higher retirement age. President Georg Feith also criticized the current increase in pensions. “If he continues this for ten years, it would cut luxury pensions by ten percent.” He sees in this the exit from an insurance system to a popular pension. “You can do that, but not without a second and third pillar,” he asked for more private provision.