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The Austrian Pension System – How Recent Reforms Have Changed Fiscal Sustainability and Pension Benefits

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Abstract

This article discusses the most recent pension reforms in Austria, which were mainly triggered by the need to alleviate the budgetary pressure stemming from the age structure of the Austrian population. Using synthetic indicators, derived from the government’s budget constraint, the paper assesses fiscal sustainability before and after the major pension reforms. Austria’s fiscal sustainability was clearly improved by the reforms. The two main factors behind this improvement are a projected increase in the average effective retirement age and a projected reduction in the generosity of the mandatory state pension system. Based on available data, the paper assesses the current and prospective level of Austrian public pension benefits and puts them into an international perspective.

Suggested Citation

  • Markus Knell & Walpurga Köhler-Töglhofer & Doris Prammer, 2006. "The Austrian Pension System – How Recent Reforms Have Changed Fiscal Sustainability and Pension Benefits," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q2/06, pages 69-93.
    • Handle: RePEc:onb:oenbmp:y:2006:i:q2/06:b:4
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    File URL: https://www.oenb.at/dam/jcr:b53c31d7-d1cf-4014-962a-534954b850a1/mop_2006_2_04_tcm16-45585.pdf
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    References listed on IDEAS

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    1. repec:wbk:wbpubs:7336 is not listed on IDEAS
    2. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    3. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
    4. Christine Mayrhuber & Thomas Url, 2000. "Umverteilung und Beitragsäquivalenz in der Alterssicherung," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(9), pages 547-557, September.
    5. Mr. N. A. Barr, 2000. "Reforming Pensions: Myths, Truths, and Policy Choices," IMF Working Papers 2000/139, International Monetary Fund.
    6. Geert Langenus, 2006. "Fiscal sustainability indicators and policy design in the face of ageing," Working Paper Research 102, National Bank of Belgium.
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    2. Godínez-Olivares, Humberto & Boado-Penas, María del Carmen & Haberman, Steven, 2016. "Optimal strategies for pay-as-you-go pension finance: A sustainability framework," Insurance: Mathematics and Economics, Elsevier, vol. 69(C), pages 117-126.
    3. Sánchez-Romero, Miguel & Sambt, Jože & Prskawetz, Alexia, 2013. "Quantifying the role of alternative pension reforms on the Austrian economy," Labour Economics, Elsevier, vol. 22(C), pages 94-114.
    4. Pierre Devolder & Susanna Levantesi & Massimiliano Menzietti, 2021. "Automatic balance mechanisms for notional defined contribution pension systems guaranteeing social adequacy and financial sustainability: an application to the Italian pension system," Annals of Operations Research, Springer, vol. 299(1), pages 765-795, April.

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    More about this item

    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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