Retirement Security: Who Pays for Our Pensions?

Regarding the ongoing topic of pensions, the head of the Pension Commission, Christine Mayrhuber, strives for objectivity. In a "Research Brief" published on Friday, she explains that the costs for old-age security within the framework of statutory pension insurance are financed approximately 73 percent by contributions from actively employed individuals and around 27 percent by funds from the federal budget. This, in turn, binds around 13 percent of the federal budget.

Pensions: Three Quarters of Costs Covered by Contributions

Last year, the total old-age expenditures amounted to nearly 78.6 billion euros, of which 63.5 billion were in statutory pension insurance (ASVG, self-employed). The rest is accounted for by civil servants.

In this context, the coverage ratio through contributions has even increased. In the 1970s, the contributions of employees covered about 68.7 percent of pension expenditures, in 2024 it was 73.1 percent.

Significant Differences Between Occupational Groups

However, there are significant differences between occupational groups. The contribution revenues of the active members cover only 20 percent of the expenditures in the social insurance of farmers, with around 80 percent financed by general tax funds. This is already explained by the fact that, on average, 1.2 pensions correspond to one actively insured person. For the self-employed, the tax-financed share was 55 percent, whereas in the ASVG it was only 21 percent.

The federal funds in statutory pension insurance and the civil service sector correspond to six percent of economic output (3.5 percent statutory pension insurance and 2.5 percent civil servants). According to the latest projections of the Pension Commission, this share will increase to about 7.2 percent by 2032 and remain around seven percent by the projection period of 2070.

Reform Proposals: Focus on Employment in Old Age

Mayrhuber also provides proposals on how to keep federal funds under control. She emphasizes that the retirement age remains a central control variable even after the alignment of the women's retirement age. However, further raising it would also require conditions in companies that enable and promote employment up to and beyond the standard retirement age. In any case, the Wifo expert advocates for greater integration of older individuals into the labor market. She also recommends preventive and rehabilitative measures in the health sector. Finally, Mayrhuber notes that aligning contribution rates to the level of employees would improve the self-financing ratio.

(APA/Red)

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