The right to retirement pension information (Madrid, July 2013)

Transcription

1 The right to retirement pension information (Madrid, 0203 July 2013) Austria 1 Michael Reingruber Federal Ministry of Labour, Social Affairs and Consumer Protection Short Introduction to the pension system in Austria The most important source for the provision of retirement income in Austria is the socalled statutory pension system ( Gesetzliche Pensionsversicherung ). It provides oldage pensions, surviving dependants pensions, as well as invalidity pensions. Today, the statutory pension system includes, in principle, all people in gainful employment (including most categories of selfemployed), with the exception of civil servants, who have traditionally been covered by their own systems. However, under the Act on the Harmonisation of Austrian Pension Systems, which took effect on 1 January 2005, uniform pension laws were created for all gainfully employed people, including federal civil servants Normal pension age is 65 for men. For women, retirement age is currently 60 years but will be increased to 65 between 2024 and There is a coverage condition: 180 months (15 years) in the last 30 years or 300 months (25 years) during the full lifetime. Alternatively, 180 months of contributions actually paid (as opposed to coverage alone) are sufficient. Insured months are either contributory months (from employment or voluntary contributions) or supplementary (i.e., credited months, known as Ersatzzeiten) for which only limited contributions are paid. Within the pension reform 2005 the number of contribution years due to gainful employment required for oldagepension has been reduced from 15 to 7 years. The remaining minimum insurance period of 8 years can be reached e.g. by child raising periods. The pension benefit currently accrues at 1.78%. The earnings measure is currently the best 24 years earnings and will reach 40 years in Valorisation for the new pension account system since 2005 is in line with earnings growth. The modelling takes this fullcareer measure and assumes that earlier years earnings are revalued in line with earnings growth, though the final year is not adjusted. The contribution to the pension system is 22,8% of the gross wage for the employed population. Whereof 10,25 are paid from the employee and 12,25 from the employer. There is a meanstested topup (Ausgleichszulage) that ensures a minimum retirement income of EUR 837,63 (2013) per month for single people and 1.255,89 for a couple. There are fourteen annual payments. Again, adjustment of the safetynet income is discretionary; the modelling implicitly assumes that it will rise in line with average earnings. 1 Prepared for the Peer Review in Social Protection and Social Inclusion programme coordinated by ÖSB Consulting, the Institute for Employment Studies (IES) and Applica, and funded by the European Commission. ÖSB Consulting,

2 Early retirement is possible on the grounds of disability: different eligibilitycriteria are existing for selfemployed, white collar and bluecollar workers; concerning the latter there is a further differentiation between skilled and unskilled workers; of longterm insurance periods (currently an insurance period of 37.5 insurance years or more is required); of longterm insurance contributions (currently a contribution period of 40 (women) / 45 (men) contributory years or more is required); of physically hard work combined with longterm insurance periods (45 insurance years or more); and the so called corridorpension at the age of 62 for both sexes, when having 37.5 insurance years or more7; in addition to the overall deduction of 4.2% per preretirement year, there is an additional deduction of 2.1 % per year of preretirement before 65. For all preretirement schemes there is a deduction of 4.2 % per preretirement year (exception: for the physically hard work scheme the deduction is 1.8 % per year), there also exists a bonus of 4.2 % per year for a retirement after 60/65. Both deduction and bonus are subject to a limitation of 12.6 %. In March 2012 a major pensionreform was passed by the Austrian parliament: this reform undertook on the one hand further incremental steps that are in line with the reforms of the last decade and which will lead to the following new legislation: The valorisation of the pensions is still according to the overall consumer price indexation, but the valorisation will be substantially lower than this index in the years 2013 and 2014; The contribution rates for selfemployed persons will be stepwise increased in the years 2012 till The ceiling for the gross earnings, up to which contributions have to be paid, will be additionally increased in one incremental step in 2013; The yearly deduction for the so called preretirement scheme corridorpension will be raised from 4.2 % to 5.1 % from 2017 onwards; The eligibility criteria for the socalled corridorpension and the phased out longterm insurance pension will be stepwise increased from 37.5 to 40 years in the period 2013 until 2017; Concerning the disability pensions the eligibility criteria for skilled bluecollar workers and for selfemployed persons are worsened: the privileged entryage of 57 years will stepwise increase to 60 in But on the other hand the most important legislative changes of the reform 2012 concern the new calculation formula for the pension benefits: The 2005 harmonized pension system brought a new individual pension account, which is more or less a notional account of a defined benefittype: according to the formula 80/65/45 it should guarantee a gross replacementrate of 80% of the lifetimeaverage earnings at the age of 65 when having 45 insurance years: but this new formula applies only to persons, born and later, and having no contributory periods prior to

3 On the other side, persons born prior to are completely in the oldsystem due to the reform 2004: the have no parallelcalculation concerning the benefit formula. The generation in between, born and later and having insurance periods before 2005, is subject of the socalled parallelcalculation: this means that the oldregime would be at least partly in effect up to the year 2050: this complex benefit calculation formula prohibits clear individual information of the accrued pensionentitlements and their future prospects. The 2012 reform abolishes the parallelcalculation and shifts the corresponding group solely into the individual pensions account scheme: All pensions rights accrued until are calculated per according to the parallelcalculation and this (fictitious) pension is transferred as a starting entry to the individual account. From 2014 on, 1.78% of the yearly contributionbase is added to this amount; additionally a yearly valorisation according to the increase of the overall average contribution base takes place. When retiring, the yearly pension equals the accrued amount of the pensionaccount. The aim of this reform is to give the clear and transparent signal and regular information to the insured person, that working longer gives a substantial rise of the accrued pension entitlement. As an important by product, this reform should decrease the gap in pensions between whitecollar and bluecollar workers and also between male and female pensioners. Concerning the secondpillar pensions, special regulations had to be enforced in the taxsystem too: a special tax regulation will compensate the current pensioners and persons retiring in the near future, for the decrease of their pension benefits (or their future pension entitlements) due to the negative performance of the capitalmarkets. This regulation will lead to an overall higher net secondpillar pension, if and only if, the pensioner pays a part of the future tax in advance ( Vorwegbesteuerung ). 3

4 1. Extent of the information on pension rights 1.1. Which actor(s) provide(s) pension communication (e.g. the government, insurance companies, pension funds, national pension authority, )? Is this pension information provided on a legal obligatory basis and/or on voluntary basis? All insured which were born after 1955 and therefore subject to the Austrian Pensionaccount Pensionskonto can obtain an account information about their valorised contributions from the social security provider (pensions) What is the content of the communication on pension rights (e.g. name, profession, employer, social security number, acquired rights, deferred rights, etc.)? Name, Social Security Number, Number of Insurance months (under the old as well as the new law (until 2005after 2005), Pension (fictive), Earliest date from which an old age pension can be obtained, missing insurance months for an old age pension, contribution date of the latest available year, table of past contributions, short legal information What is the periodicity of the communication (e.g. annual, monthly, permanently available through the internet, )? Permanently available through the internet (yearly data) Is information general or specific (related to the recipient)? Specific How is the retirement pension in the communication calculated? It is calculated on the specific contributions of the recipient (no calculation on potentially future contributions) What parameters are established for this calculation? According to the insured contributions of the past the amount is valorised over the years. The assumption is that the insured obtains the pension at the statutory retirement age (no bonus/no malus) Which profitability ratios are used? How are the estimations on the contributory bases calculated for future periods? At the moment the Austrian account information does not include estimations for future periods. 4

5 Which entity/entities determine these parameters (e.g. consumers price index)? Valorisation for the new pension account system since 2005 is in line with earnings growth Are there any other hypotheses to be taken into account for the calculations? 1.6. Are prospects, estimates, simulations, being made (e.g. information regarding benefits at an earlier or later age than the statutory retirement age)? 1.7. For funded schemes: what assumptions are used with regard to the rate of return, the interest rate and the inflation? There is no funded scheme within the Austrian public pension system (first pillar) Is the communication integrated (covers all possible pension schemes, irrespective of pillars or other elements)? If yes, is it also consolidated (information on public and private pension rights are communicated together)? It is integrated as far as it includes all branches of the social security system (workers, farmers, selfemployed), the information itself is solely for the first pillar. 2. Manner of the communication 2.1. By which means is the information provided to the citizen (e.g. by ordinary mail, internet website, , mobile phones )? The information can be obtained personally at the social security institutions or online via the internet If the information is provided by using the internet, how is the user identified? The user has to use a citizencard (Bürgerkarte) which can be a physical available card (a card reading device is needed) or a cellphone which has been identified and assigned to the insured person. 5

6 2.3. Is extra information or comment on pension rights provided (e.g. by call centre, invitations for personal communication, chat sessions with the pension institution )? Recently there has been a call centre established which is specially for the pensionaccount information but there is also the possibility to contact the responsible social security provider for receiving further information about pension rights Is there any control whether the recipient has received and opened the message? 2.5. Is the information provided on request of the person concerned or automatically by the Social Security System itself? On request at the moment, but in 2014 all insured born after 1954 will receive an account information In which language(s) is the information available? Who establishes the language of the communication? On what grounds? German Are estimated amounts given in current or future value? Current Are absolute numbers or percentages used? Absolute numbers Are numbers rounded (no figures after the comma)? Numbers with comma (2 decimal places) Are visual effects used (e.g. charts, colours, drawings, )? What is the assumed level of understanding of the recipient? (How) is the financial (il)literacy of the recipient taken into account? 6

7 2.13. Is the communication layered (e.g. the older a person gets or the further one looks into a website, the more detailed the information )? Is communication standardized (by various pension actors) relating to terminology, wording of the content, tables and/or graphs? (please specify) Is pension information centralized (retained in one single administration, body or database) and/or decentralized (e.g. crossroads bank) Is pension information embedded with other information (e.g. in general social security information, bank or insurance communication )? 3. Target group of the communication 3.1. To whom is the communication targeted? (e.g. active workers, selfemployed, salaried workers, civil servants, deferred beneficiaries meaning socalled sleepers with dormant rights..)? To all insured persons who are born 1955 or later with at least one month of insured work From what age onwards do citizens receive the communication and how much time prior to the statutory retirement age is the information provided? See What requirements must the citizens comply with in order to get the information (if any)? See

8 4. The legal value and authenticity of the communication 4.1. Does the current legislation provide a right to pension information (if so, how is it formulated)? 13 APG On request the responsible pension insurance provider has to inform about the pension information is not legally binding What future legislation on pension communication is envisaged (if any)? Millions of insured will receive 2014 their first pension information by mail. It is likely that in the course of this the need for improvement and additional information may arise, but as it is now there is no legislation on pension communication planned What is the material and personal scope of the current and/or future legislation? 4.4. How are the necessary data provided to the authority/institution responsible for the information on pension rights? The necessary data is already at the institutions due the report of gainful work by the companies for their employees. For 2014 when all insured born after 1954 shall receive their pension information there is a huge survey ongoing now which aims to close all gaps (by selfreporting) in the insurancehistory (childraising times, even times in the early seventies where there was no computerbased system available) Who owns the pension data and who validates them? 4.6. Is there a central database or not? And if so, is it solely responsible for the data? 4.7. Is the communication authenticated in one or the other way? 4.8. Is the recipient of the information asked to verify the information? 4.9. In case of wrong communication, who is held responsible (e.g. the owner of the data and/or the provider of the data and/or the communicator)? 8

9 4.10. Does the communication create a legitimate expectation whereby a possible beneficiary can have a claim against the pension provider (e.g. in case of a wrong prospect of simulation)? What are the legal disclaimers used? How is the privacy of the recipients respected, in particular when the internet is used as communication channel? 5. Further information Is there any other relevant element which you think is necessary to understand the right of retirement pension information in your country that has not been dealt with by this questionnaire? For Austria the individual pension account system which has been introduced in 2005 (for cohorts 1987 and younger) will be put to the next level in 2014 when it reaches a broad awareness in the population with the inclusion of the cohorts between 1955 and Because we lack of longtime experience regarding pension information we are looking forward to learn about the lessons learned in other Member States. 9