Austria Calculation of pension replacement ratios ) 00% of average earnings 2005 200 2030 2050 Table Gross earnings /month 2335 2646 3780 5400 - Employee contribution to st pillar 239 27 387 554 = Net income without pension contributions 2096 2374 3392 4847 - Other social insurance contributions (health insurance, unemployment insurance) 73 96 280 400 - Taxes 383 434 620 885 = Net income 540 745 2493 3562 Gross pension from st pillar 496 707 2486 3702 - Social insurance contributions (health insurance) 56 64 93 39 - Taxes 98 226 329 49 = Net pension income 24 47 2063 3073 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
Table 2 Employment ratios in Austria Total Women Men Total Women Men aged 55-64 2000 68,5 59,6 77,3 28,8 7,2 4,2 200 68,5 60,7 76,4 28,9 8,4 40, 2002 69,2 62,5 75,9 29,7 20,4 39,7 2003 69,2 62,8 75,8 30,4 2,5 40, Source: Eurostat
Financial effects of the pension reform 2004 by individual measures Table 3 (in m) ) A Measures concerning benefits-related legislation 2005 2006 2007 2008 2009 200 New rules on loss limit -23-45 -83-40 -24-238 2 Changes of pension adjustment (solidarity contribution) 0 6 2 8 8 8 3 "Heavy workers"/long-term insured -20-40 -40-300 -320-30 Total effects A -43-79 -2-422 -56-530 B Measures concerning contributions-related legislation 2005 2006 2007 2008 2009 200 Increasing the contribution rate 0 2 43 59 77 95 2 Decreasing the minimum contribution basis 0-2 -43-59 -77-95 3 Increasing the maximum contribution basis 56 57 59 60 6 63 Total effects B 56 57 59 60 6 63 C Measures regarding partial insurance periods (previously "replacement periods) 2005 2006 2007 2008 2009 200 Financing of unemployment periods/unemployment assistance periods by the Labour Market Policy Fund 20 25 220 225 230 235 2 Financing of childcare periods by the FLAF 70 78 80 80 80 430 Total effects C 380 393 400 405 40 665 Sum of all measures (A+B+C) of the reform 2004 393 37 248 43-44 97 Sum of all measures of the pension reform 2003 479 654 843 063 340 558 Sum of all measures of the pension reforms 2003 and 2004 873 025 09 06 296 755 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 ]
Key parameters for estimating the long-term effects of the harmonisation of pension systems in 2004 Table 4 Starting point Long-term projection 2005 205 2020 2025 2030 2035 2040 2045 2050 Annual change from 2005 to 2050 DEMOGRAPHY Population at year-end 844546 8354890 8404734 8426632 84872 838329 8322885 8246333 852803 0,0% of which aged 5-64 5499360 5598949 555492 546702 52795 503903 493574 4856202 4748987-0,3% above 64 354687 583746 694574 87962 2093000 227238 2352850 2380578 2409494,3% Old-age dependency ratio 246 283 305 346 40 45 477 490 507,6% 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 55-64 44,0% 50,3% 52,7% 54,8% 56,7% 57,3% 58,2% 57,7% 57,8% Employment rates women aged 55-64 8,8% 24,7% 28,4% 32,6% 36,8% 39,6% 42,7% 45,0% 47,5% Working-age population (incl unemplo 37844 3895897 3886497 3828206 377602 3732946 370009 3669067 3603642-0,% 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
Long-term financial effects of the pension reform 2004 - comparison of legislation Comparison of the legislations Table 5 Starting point Long-term projection 2005 205 2020 2025 2030 2035 2040 2045 2050 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
Table 6 Long-term financial effects of the pension reform 2004 - results of the long-term forecasts Results of the long-term prognoses Starting point Long-term projection Annual change from 2005 to 2050 2005 205 2020 2025 2030 2035 2040 2045 2050 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 2044432 2290823 2403343 253093 2628820 2722 2735674 2709627 267440 0,6% 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 32799 3439907 345684 34378 33828 3355342 3337738 332802 3274028 0,0% 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
Example of crediting and valuation of childcare periods Table 7 Example: Woman, 2 children st child: born on March 2000 2nd 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 72 78 ) 2%,78% CS basic rate CB CCP 663 57 2) CPI wage incr 2% 3,85% 20 3594 30 46
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 993 8 9392,39 0,00 0,00 9392,39,78% 67,8 0,00 0,00,0560 67,8 994 9 0953,0 0,00 0,00 0953,0,78% 94,96 0,00 74,37,0430 369,34 9 5238,97 0,00 0,00 5238,97 27,25 0,00 0,00,0430 27,25 995 20 2899,87 0,00 0,00 2899,87,78% 229,62 0,00 385,96,0450 65,58 20 603,63 0,00 0,00 603,63 285,04 0,00 283,46,0450 568,50 996 2 9270,22 0,00 0,00 9270,22,78% 343,0 0,00 637,74,0360 980,75 2 6633,24 0,00 0,00 6633,24 296,07 0,00 588,97,0360 885,04 997 22 20869,8 0,00 0,00 20869,8,78% 37,48 0,00 007,23,0270 378,7 22 6777,69 0,00 0,00 6777,69 298,64 0,00 908,94,0270 207,58 998 23 22698,44 0,00 0,00 22698,44,78% 404,03 202,02 43,8,0250 65,9 23 0,00 4793,63 3843,9 8637,53 33,75 202,02 237,77,0250 77,53 999 24 24372,93 0,00 0,00 24372,93,78% 433,84 26,92 650,73,0220 867,65 24 0,00 0,00 490,0 490,0 252,58 26,92 80,5,0220 2280,0 2000 25 26096,29 0,00 0,00 26096,29,78% 464,5 232,26 92,47,0240 244,73 25 0,00 0,00 4502,9 4502,9 258,4 232,26 2334,73,0240 2825,2 200 26 288,63 0,00 0,00 288,63,78% 500,5 250,26 283,33,080 2433,59 26 0,00 0,00 4850,24 4850,24 264,33 250,26 2875,98,080 3390,57 2002 27 29883,72 0,00 0,00 29883,72,78% 53,93 265,97 2506,59,0300 2772,56 27 9352,92 0,00 57,54 24470,46 435,57 265,97 3492,28,0300 493,82 2003 28 3720,09 0,00 0,00 3720,09,78% 564,62 282,3 289,69,070 302,00 28 9868,47 0,00 557,07 25439,54 452,82 282,3 4265,2,070 5000,25 2004 29 3325,6 0,00 0,00 3325,6,78% 59,23 0,00 373,35,0230 3764,58 29 0036,24 0,00 0,00 0036,24 78,64 0,00 55,26,0230 5293,90 2005 30 3472,47 0,00 0,00 3472,47,78% 67,88 0,00 3909,5,0385 4527,40 30 0267,07 0,00 0,00 0267,07 82,75 0,00 5497,72,0385 5680,47 2006 3 36556,63 0,00 0,00 36556,63,78% 650,7 0,00 470,70,0385 5352,4 3 096,22 0,00 0,00 096,22 94,3 0,00 5899,7,0385 6093,48 2007 32 37436,78 0,00 0,00 37436,78,78% 666,37 0,00 5558,48,0385 6224,85 32 336,49 0,00 0,00 336,49 20,79 0,00 6328,08,0385 6529,87 2008 33 395,89 0,00 0,00 395,89,78% 696,90 0,00 6464,5,0385 76,4 33 2046,73 0,00 0,00 2046,73 24,43 0,00 678,27,0385 6995,70 2009 34 4796,56 0,00 0,00 4796,56,78% 743,98 0,00 7437,3,0385 88,0 34 250,53 0,00 0,00 250,53 222,69 0,00 7265,03,0385 7487,72 200 35 45767,94 0,00 0,00 45767,94,78% 84,67 0,00 8496,08,0385 930,75 35 3287,47 0,00 0,00 3287,47 236,52 0,00 7776,00,0385 802,5 20 36 49369,88 0,00 0,00 49369,88,78% 878,78 0,00 9669,2,0385 0547,99 36 3799,03 0,00 0,00 3799,03 245,62 0,00 8320,99,0385 8566,62 202 37 52544,42 0,00 0,00 52544,42,78% 935,29 0,00 0954,09,0385 889,38 37 4648,75 0,00 0,00 4648,75 260,75 0,00 8896,43,0385 957,8 203 38 54236,67 0,00 0,00 54236,67,78% 965,4 0,00 2347,2,0385 332,54 38 522,72 0,00 0,00 522,72 270,79 0,00 9509,73,0385 9780,52 204 39 56668,23 0,00 0,00 56668,23,78% 008,69 0,00 3825,07,0385 4833,76 39 6485,30 0,00 0,00 6485,30 293,44 0,00 057,07,0385 0450,5 205 40 59206,62 0,00 0,00 59206,62,78% 053,88 0,00 5404,86,0385 6458,74 40 33526,64 0,00 0,00 33526,64 596,77 0,00 0852,85,0385 449,63 206 4 63338,07 0,00 0,00 63338,07,78% 27,42 0,00 7092,40,0385 829,82 4 3587,8 0,00 0,00 3587,8 626,34 0,00 890,44,0385 256,78 207 42 6539,92 0,00 0,00 6539,92,78% 63,98 0,00 892,28,0385 20085,26 42 373,86 0,00 0,00 373,86 664,5 0,00 2998,67,0385 3662,83 208 43 667, 0,00 0,00 667,,78% 87,46 0,00 20858,54,0385 22046,00 43 3947,84 0,00 0,00 3947,84 696,83 0,00 488,84,0385 4885,68 209 44 70524,03 0,00 0,00 70524,03,78% 255,33 0,00 22894,77,0385 2450,0 44 4484,72 0,00 0,00 4484,72 738,43 0,00 5458,77,0385 697,20 2020 45 755,93 0,00 0,00 755,93,78% 272,98 0,00 25079,88,0385 26352,86 45 4352,70 0,00 0,00 4352,70 774,53 0,00 6820,80,0385 7595,32 202 46 756,5 0,00 0,00 756,5,78% 345,88 0,00 27367,45,0385 2873,33 46 46082,75 0,00 0,00 46082,75 820,27 0,00 8272,74,0385 9093,0 2022 47 78057,92 0,00 0,00 78057,92,78% 389,43 0,00 2988,79,0385 3208,23 47 4832,57 0,00 0,00 4832,57 860,2 0,00 9828,0,0385 20688,22 2023 48 80098, 0,00 0,00 80098,,78% 425,75 0,00 32409,74,0385 33835,49 48 50664,47 0,00 0,00 50664,47 90,83 0,00 2484,72,0385 22386,54 2024 49 8279,70 0,00 0,00 8279,70,78% 462,80 0,00 3538,5,0385 36600,95 49 5367,24 0,00 0,00 5367,24 954,39 0,00 23248,42,0385 24202,8 2025 50 85343,62 0,00 0,00 85343,62,78% 59,2 0,00 3800,09,0385 39529,2 50 56722,28 0,00 0,00 56722,28 009,66 0,00 2534,62,0385 2644,28 2026 5 88629,35 0,00 0,00 88629,35,78% 577,60 0,00 405,08,0385 42628,68 5 59446,5 0,00 0,00 59446,5 058,5 0,00 2750,83,0385 28208,98 2027 52 94286,49 0,00 0,00 94286,49,78% 678,30 0,00 44269,89,0385 45948,9 52 62857,66 0,00 0,00 62857,66 8,87 0,00 29295,02,0385 3043,89 2028 53 98499,36 0,00 0,00 98499,36,78% 753,29 0,00 4777,9,0385 49470,48 53 66443,35 0,00 0,00 66443,35 82,69 0,00 3584,83,0385 32767,52 2029 54 02896,86 0,00 0,00 02896,86,78% 83,56 0,00 5375,09,0385 53206,66 54 69606,70 0,00 0,00 69606,70 239,00 0,00 34029,07,0385 35268,07 2030 55 09372,70 0,00 0,00 09372,70,78% 946,83 0,00 55255,,0385 5720,95 55 73543,7 0,00 0,00 73543,7 309,08 0,00 36625,89,0385 37934,97 203 56 4236,33 0,00 0,00 4236,33,78% 2033,4 0,00 59404,22,0385 6437,63 56 77680,70 0,00 0,00 77680,70 382,72 0,00 39395,46,0385 40778,8 2032 57 7278,6 0,00 0,00 7278,6,78% 2087,56 0,00 63802,98,0385 65890,54 57 82027,23 0,00 0,00 82027,23 460,08 0,00 42348,4,0385 43808,22 2033 58 2089,82 0,00 0,00 2089,82,78% 255,40 0,00 68427,32,0385 70582,72 58 86593,30 0,00 0,00 86593,30 54,36 0,00 45494,84,0385 47036,20 2034 59 25020,67 0,00 0,00 25020,67,78% 2225,37 0,00 73300,6,0385 75525,53 59 90658,26 0,00 0,00 90658,26 63,72 0,00 48847,09,0385 50460,8 2035 60 29074,70 0,00 0,00 29074,70,78% 2297,53 0,00 78433,26,0385 80730,79 60 95667,3 0,00 0,00 95667,3 702,87 0,00 52403,55,0385 5406,43 2036 6 34044,08 0,00 0,00 34044,08,78% 2385,98 0,00 83838,92,0385 86224,9 6 99350,3 0,00 0,00 99350,3 768,44 0,00 5689,52,0385 57957,96 2037 62 39204,77 0,00 0,00 39204,77,78% 2477,84 0,00 89544,57,0385 92022,4 62 0375,30 0,00 0,00 0375,30 836,52 0,00 6089,34,0385 62025,86 2038 63 44564,6 0,00 0,00 44564,6,78% 2573,24 0,00 95565,28,0385 9838,52 63 0747,55 0,00 0,00 0747,55 907,23 0,00 6443,86,0385 6632,08 2039 64 5029,88 0,00 0,00 5029,88,78% 2672,3 0,00 9838,52,0000 0080,83 64 272,73 0,00 0,00 272,73 980,65 0,00 6632,08,0000 6830,74 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
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 2003 2004 Calculation basis: 396 505 Additional months of IB: Insurance years: 22 22 Increment percentage: 2,78 Deductions in points: 0 Additions in points: 44 39,46 Deduction in %: 0,0% Pension 2003: 69 594 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: 92 950 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