Economy Huge plus
9.7 percent more pension – but that’s not enough for the Austrians
Status: 08.08.2023 | Reading time: 2 minutes
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Austria’s pensioners can look forward to a significantly higher pension. They should get almost ten percent more money next year. This is about twice as high as in Germany. Nevertheless, the association is dissatisfied.
Paradisiacal conditions in Austria: According to Chancellor Karl Nehammer (ÖVP), pensions will increase by 9.7 percent at the beginning of next year. That is more than twice as much as the pension increase in western Germany of 4.39 percent (east: 5.89 percent) in July of this year.
But that’s not enough for the representatives of Austria’s pensioners: They described the massive increase as “obvious” and are now even demanding an extra lookup. Reason: The inflation rate of over ten percent in recent months would not be sufficiently taken into account.
According to the Social Democrat Peter Kostelka from the Austrian Pensioners’ Association (PVÖ), pensioners “should not be the only ones who have not been compensated for the massive loss of purchasing power in recent years”. The planned increase will cost the social security funds and taxpayers in Austria at least 5.3 billion euros.
But why are pensions in the neighboring country rising so much faster than in Germany? In this country, the federal government sets the so-called pension value on the first of July of a year, and the Bundesrat must then agree.
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In Austria, on the other hand, the increase is not determined by politics, but by the so-called adjustment factor, which is measured against the inflation rate of the past twelve months. In Austria, it has also been customary in recent years to top up the percentage increase with a tax- and duty-free direct payment. This additional payment is referred to as the so-called social component.
“It doesn’t work forever”
And this is exactly what the demands of the pensioners’ lobbyists from the Pensioners’ Association are now aiming for. Nehammer said on the other hand: “So at 9.7 percent we are dealing with a percentage that is very high.” Social Minister Johannes Rauch (Greens), unlike Nehammer, did not want to commit himself yet. Austria must “act very responsibly” with the adjustments, he said.
In the meantime, there are repeated calls for a later retirement age in Austria. As a rule, men retire at the age of 65 and women at the age of 60. Scientists emphasize that this state of affairs cannot be maintained much longer in view of the demographic development, because at some point the pension funds would then run out of funds.
“My impression is that in Austria people are counting on the pension system being cross-financed from the state budget,” said Holger Bonin, director of the Institute for Advanced Studies in the newspaper “Die Presse”. “But that doesn’t work in the long run.”
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