Calculation of pension replacement ratios 1) 100% of average earnings

Transcription

1 Austria Calculation of pension replacement ratios ) 00% of average earnings Table Gross earnings /month Employee contribution to st pillar = Net income without pension contributions Other social insurance contributions (health insurance, unemployment insurance) Taxes = Net income Gross pension from st pillar Social insurance contributions (health insurance) Taxes = Net pension income Gross replacement ratio (gross pension/gross earnings) 64,% 64,5% 65,8% 68,5% Net replacement ratio (net pension/net income) 80,6% 8,2% 82,8% 86,3% ) Pension level and replacement ratio calculation are based on the new arrangements of the pension reforms 2003 and 2004

2 Table 2 Employment ratios in Austria Total Women Men Total Women Men aged ,5 59,6 77,3 28,8 7,2 4, ,5 60,7 76,4 28,9 8,4 40, ,2 62,5 75,9 29,7 20,4 39, ,2 62,8 75,8 30,4 2,5 40, Source: Eurostat

3 Financial effects of the pension reform 2004 by individual measures Table 3 (in m) ) A Measures concerning benefits-related legislation New rules on loss limit Changes of pension adjustment (solidarity contribution) "Heavy workers"/long-term insured Total effects A B Measures concerning contributions-related legislation Increasing the contribution rate Decreasing the minimum contribution basis Increasing the maximum contribution basis Total effects B C Measures regarding partial insurance periods (previously "replacement periods) Financing of unemployment periods/unemployment assistance periods by the Labour Market Policy Fund Financing of childcare periods by the FLAF Total effects C Sum of all measures (A+B+C) of the reform Sum of all measures of the pension reform Sum of all measures of the pension reforms 2003 and Percentage of the GDP 0,4% 0,4% 0,4% 0,4% 0,5% 0,6% ) a minus before a number indicates additional expenditure FLAF Family Equalisation Fund ]

4 Key parameters for estimating the long-term effects of the harmonisation of pension systems in 2004 Table 4 Starting point Long-term projection Annual change from 2005 to 2050 DEMOGRAPHY Population at year-end ,0% of which aged ,3% above ,3% Old-age dependency ratio ,6% Remaining life expectancy at 65 8,5 9,5 20,0 20,5 2,0 2,5 22,0 22,5 22,9 Labour force participation ) Employment rates total of men 76,7% 76,8% 77,0% 77,2% 78,7% 80,3% 8,2% 8,3% 8,2% Employment rates total of women 60,8% 6,5% 6,7% 62,4% 64,7% 67,4% 69,0% 69,7% 70,% Employment rates men aged ,0% 50,3% 52,7% 54,8% 56,7% 57,3% 58,2% 57,7% 57,8% Employment rates women aged ,8% 24,7% 28,4% 32,6% 36,8% 39,6% 42,7% 45,0% 47,5% Working-age population (incl unemplo ,% ECONOMIC ASSUMPTIONS Productivity -,88%,84%,79%,75%,75%,75%,75%,75% Real wage increase -,88%,84%,79%,75%,75%,75%,75%,75% Real GDP growth - 2,05% 2,42%,83% 2,04%,40% 2,2%,43%,42% ) Labour force participation based on "cost of living concept" GDP Gross Domestic Product

5 Long-term financial effects of the pension reform comparison of legislation Comparison of the legislations Table 5 Starting point Long-term projection Annual change from 2005 to 2050 BEFORE REFORM 2003 (legislation as of 3 Dec 2003) Expenditure of entire PI in EUR billion 24,9 33,4 38,2 44, 50,0 56,0 60,3 63,5 66,7 2,2% Expenditure in % of the GDP 0,2% 0,8%,3% 2,% 2,7% 3,2% 3,% 2,8% 2,5% Federal funds in EUR billion 6,3 9,9 2,6 6,4 20,2 23,9 25,5 25,8 26,2 3,2% Federal funds in % of the GDP 2,6% 3,2% 3,7% 4,5% 5,% 5,6% 5,6% 5,2% 4,9% REFORM 2003 (legislation 2004) Expenditure of entire PI in EUR billion 24,9 32,3 36,4 4,5 46,7 52,0 55,8 58,7 6,6 2,0% Expenditure in % of the GDP 0,2% 0,4% 0,8%,4%,9% 2,3% 2,2%,8%,6% Federal funds in EUR billion 6, 8,6 0,5 3,6 6,6 9,6 20,7 20,7 20,8 2,8% Federal funds in % of the GDP 2,5% 2,8% 3,% 3,7% 4,2% 4,6% 4,5% 4,2% 3,9% REFORM 2004 (legislation 2005) Expenditure of entire PI in EUR billion 24,8 33, 37,7 42,5 46,8 50,9 53,9 56,2 58,5,9% Expenditure in % of the GDP 0,% 0,6%,%,6%,8% 2,0%,7%,3% 0,9% Federal funds in EUR billion 5,5 8,5 0,8 3,5 5,5 7,2 7,5 6,8 6,2 2,4% Federal funds in % of the GDP 2,2% 2,7% 3,% 3,7% 3,9% 4,0% 3,8% 3,3% 3,0% GDP Gross Domestic Product PI Pension insurance

6 Table 6 Long-term financial effects of the pension reform results of the long-term forecasts Results of the long-term prognoses Starting point Long-term projection Annual change from 2005 to EXPENDITURE TRENDS Expenditure of entire PI in EUR billion 24,8 33, 37,7 42,5 46,8 50,9 53,9 56,2 58,5,9% Expenditure in % of the GDP 0,% 0,6%,%,6%,8% 2,0%,7%,3% 0,9% of which pension expenditure in EUR billion 22,5 30, 34,4 38,8 42,7 46,6 49,3 5,4 53,5,9% Pension expenditure - direct pensions 8,4 25,6 29,6 33,8 37,6 4,0 43,7 46,0 48,5 2,2% Pension expenditure - survivors' benefits 4, 4,6 4,8 5,0 5,2 5,5 5,6 5,4 5,0 0,4% Pension benefits total PI ,6% REVENUE TRENDS Revenue of the entire PI in EUR billion 9,2 24,5 26,9 29,0 3,2 33,7 36,5 39,5 42,3,8% Revenue in % of the GDP 7,8% 8,0% 7,9% 7,9% 7,9% 7,9% 7,9% 7,9% 7,9% of which compulsory contributions in EUR billion 7,9 22,6 24,7 26,6 28,6 30,8 33,4 36,2 38,9,7% Compulsory contributions in % of the GDP 7,3% 7,4% 7,4% 7,4% 7,4% 7,4% 7,4% 7,4% 7,4% Insured persons ,0% Old-age dependency ratios 62,5% 66,6% 69,6% 74,% 77,7% 8,% 82,0% 8,6% 8,7% 0,6% TRENDS OF THE FEDERAL FUNDS Federal funds in EUR billion 5,5 8,5 0,8 3,5 5,5 7,2 7,5 6,8 6,2 2,4% Federal funds in % of the GDP 2,2% 2,7% 3,% 3,7% 3,9% 4,0% 3,8% 3,3% 3,0% GDP Gross Domestic Product PI Pension insurance

7 Example of crediting and valuation of childcare periods Table 7 Example: Woman, 2 children st child: born on March nd child: born on Sept 2002 Period between the two births: 30 months Retirement: 2035 Employment Employment 0 MA 0 MA 0 MA 0 MA 0 MA 0 MA 2 6 m o n t h s 7 6 o f m o n c h t i h l s d c o f a r e c h i l d c 0 MA a 0 MA r e 0 MA 0 MA 4 6 m o n t h s C C P Start of maternity protection period Birth of st child Start of employment Birth of the 2nd child 4th birthday of the st child 4th birthday of the 2nd child Crediting of childcare periods: Number of months Increment percentage Calculation basis CB 2005 Revaluation based on Revaluation factor pa CB 2005 revalued to 2035 Pension increase ) 6 months more because: 2 months maternity allowance (MA) after birth of st child 4 months of maternity allowance for 2nd child because the st child is under 4 years 2) Calculation basis for childcare periods:,57 euro, corresponds to,350 euro 2 times a year 3) The loss limit of 0% based on the legislation as of 2003 was taken into account L Legislation as of CB Calculation basis CCP Childcare period CS Compensation supplement CPI Consumer Price Index old L 3) new L ) 2%,78% CS basic rate CB CCP ) CPI wage incr 2% 3,85%

8 Effects of pension splitting on pension entitlements Table 8 Annual earnings Married couple with two children and pension splitting Husband - dependent employee Wife - dependent employee Income career Pension account calculation Income career Pension account calculation Contribution basis of Account percenta Revalued credits of previous UB, SB, Total annual Credit Splitting Revaluation UB, SB, Annual total Credit Splitting Revaluation Year Age ASVG UAB childcare income ge current yr years factor Total credit Age ASVG UAB childcare income current yr factor Total credit ,39 0,00 0, ,39,78% 67,8 0,00 0,00, , ,0 0,00 0, ,0,78% 94,96 0,00 74,37, , ,97 0,00 0, ,97 27,25 0,00 0,00, , ,87 0,00 0, ,87,78% 229,62 0,00 385,96, , ,63 0,00 0,00 603,63 285,04 0,00 283,46, , ,22 0,00 0, ,22,78% 343,0 0,00 637,74, , ,24 0,00 0, ,24 296,07 0,00 588,97, , ,8 0,00 0, ,8,78% 37,48 0,00 007,23, , ,69 0,00 0, ,69 298,64 0,00 908,94, , ,44 0,00 0, ,44,78% 404,03 202,02 43,8, ,9 23 0, , ,9 8637,53 33,75 202,02 237,77, , ,93 0,00 0, ,93,78% 433,84 26,92 650,73, , ,00 0,00 490,0 490,0 252,58 26,92 80,5, , ,29 0,00 0, ,29,78% 464,5 232,26 92,47, , ,00 0, ,9 4502,9 258,4 232, ,73, , ,63 0,00 0,00 288,63,78% 500,5 250,26 283,33, , ,00 0, , ,24 264,33 250, ,98, , ,72 0,00 0, ,72,78% 53,93 265, ,59, , ,92 0,00 57, ,46 435,57 265, ,28, , ,09 0,00 0, ,09,78% 564,62 282,3 289,69, , ,47 0,00 557, ,54 452,82 282,3 4265,2, , ,6 0,00 0, ,6,78% 59,23 0,00 373,35, , ,24 0,00 0, ,24 78,64 0,00 55,26, , ,47 0,00 0, ,47,78% 67,88 0, ,5, , ,07 0,00 0, ,07 82,75 0, ,72, , ,63 0,00 0, ,63,78% 650,7 0,00 470,70, , ,22 0,00 0,00 096,22 94,3 0, ,7, , ,78 0,00 0, ,78,78% 666,37 0, ,48, , ,49 0,00 0,00 336,49 20,79 0, ,08, , ,89 0,00 0,00 395,89,78% 696,90 0, ,5, , ,73 0,00 0, ,73 24,43 0,00 678,27, , ,56 0,00 0, ,56,78% 743,98 0, ,3, , ,53 0,00 0,00 250,53 222,69 0, ,03, , ,94 0,00 0, ,94,78% 84,67 0, ,08, , ,47 0,00 0, ,47 236,52 0, ,00, , ,88 0,00 0, ,88,78% 878,78 0, ,2, , ,03 0,00 0, ,03 245,62 0, ,99, , ,42 0,00 0, ,42,78% 935,29 0, ,09, , ,75 0,00 0, ,75 260,75 0, ,43, , ,67 0,00 0, ,67,78% 965,4 0, ,2, , ,72 0,00 0,00 522,72 270,79 0, ,73, , ,23 0,00 0, ,23,78% 008,69 0, ,07, , ,30 0,00 0, ,30 293,44 0,00 057,07, , ,62 0,00 0, ,62,78% 053,88 0, ,86, , ,64 0,00 0, ,64 596,77 0, ,85, , ,07 0,00 0, ,07,78% 27,42 0, ,40, , ,8 0,00 0, ,8 626,34 0,00 890,44, , ,92 0,00 0, ,92,78% 63,98 0,00 892,28, , ,86 0,00 0,00 373,86 664,5 0, ,67, , , 0,00 0,00 667,,78% 87,46 0, ,54, , ,84 0,00 0, ,84 696,83 0,00 488,84, , ,03 0,00 0, ,03,78% 255,33 0, ,77, , ,72 0,00 0, ,72 738,43 0, ,77, , ,93 0,00 0,00 755,93,78% 272,98 0, ,88, , ,70 0,00 0, ,70 774,53 0, ,80, , ,5 0,00 0,00 756,5,78% 345,88 0, ,45, , ,75 0,00 0, ,75 820,27 0, ,74, , ,92 0,00 0, ,92,78% 389,43 0, ,79, , ,57 0,00 0, ,57 860,2 0, ,0, , , 0,00 0, ,,78% 425,75 0, ,74, , ,47 0,00 0, ,47 90,83 0, ,72, , ,70 0,00 0, ,70,78% 462,80 0, ,5, , ,24 0,00 0, ,24 954,39 0, ,42, , ,62 0,00 0, ,62,78% 59,2 0, ,09, , ,28 0,00 0, ,28 009,66 0, ,62, , ,35 0,00 0, ,35,78% 577,60 0,00 405,08, , ,5 0,00 0, ,5 058,5 0, ,83, , ,49 0,00 0, ,49,78% 678,30 0, ,89, , ,66 0,00 0, ,66 8,87 0, ,02, , ,36 0,00 0, ,36,78% 753,29 0, ,9, , ,35 0,00 0, ,35 82,69 0, ,83, , ,86 0,00 0, ,86,78% 83,56 0, ,09, , ,70 0,00 0, ,70 239,00 0, ,07, , ,70 0,00 0, ,70,78% 946,83 0, ,, , ,7 0,00 0, ,7 309,08 0, ,89, , ,33 0,00 0, ,33,78% 2033,4 0, ,22, , ,70 0,00 0, ,70 382,72 0, ,46, , ,6 0,00 0, ,6,78% 2087,56 0, ,98, , ,23 0,00 0, ,23 460,08 0, ,4, , ,82 0,00 0, ,82,78% 255,40 0, ,32, , ,30 0,00 0, ,30 54,36 0, ,84, , ,67 0,00 0, ,67,78% 2225,37 0, ,6, , ,26 0,00 0, ,26 63,72 0, ,09, , ,70 0,00 0, ,70,78% 2297,53 0, ,26, , ,3 0,00 0, ,3 702,87 0, ,55, , ,08 0,00 0, ,08,78% 2385,98 0, ,92, , ,3 0,00 0, ,3 768,44 0, ,52, , ,77 0,00 0, ,77,78% 2477,84 0, ,57, , ,30 0,00 0, ,30 836,52 0, ,34, , ,6 0,00 0, ,6,78% 2573,24 0, ,28, , ,55 0,00 0, ,55 907,23 0, ,86, , ,88 0,00 0, ,88,78% 2672,3 0, ,52, , ,73 0,00 0,00 272,73 980,65 0, ,08, ,74 monthly pension 6933,82 monthly pension 4697,83 Gross replacement rate with splitting 64,66% Gross replacement rate with splitting 59,% without splitting 68,27% without splitting 54,23% -5,29% 8,25% UB Unemployment benefit; SB Sickness benefit; UAB Unemployment assistance benefit Annual earnings Contribution basis of Revalued credits of previous years

9 Pension calculation - parallel calculation method - few insurance years Table 9 Example - case no: 005 Female worker - 2 children, 6 years before retirement no activity Year of retirement: 2040 Retirement at age of: 65 Corridor pension reference age: 65,0 Last income: 2000 Number of years as "heavy worker": ( 0 months ) Number of insurance years: 22,7 ( 266 months ) of which up to 2004: 7,7 ( 86 months ) as from 2005: 5 ( 80 months ) Type of benefit: pension / corridor pension Parallel calculation method has to be appl Pension based on legislation as of 2004: Legislation Calculation basis: Additional months of IB: Insurance years: Increment percentage: 2,78 Deductions in points: 0 Additions in points: 44 39,46 Deduction in %: 0,0% Pension 2003: Loss limit: 0,0% Pension 2003 minus max loss: 557 Pension 2004 (before corridor deduction): 594 comparative calculation Corridor deduction: 0,0% Pension 2004: 594 Gross replacement rate: 30,9% 29,7% Account credit: 20 Deduction in %: 0,0% Account pension: 20 Added months: Account pension: 20 Gross replacement rate: 56,0% PARALLEL CALCULATION: Pension based on L 2004: 594 Insurance years credited: 7 Pension Partial pension L 2004: Pension based on pension account: 20 Gross replacement rate Insurance years credited: 5 47,5% Partial pension - pension account: 758 L Legislation as of, IB Invalidity benefits