The Chamber of Commerce is campaigning for the national introduction of company pensions. All employees can benefit from this during their later retirement. Even small contributions would significantly increase future pensions.
Supplementary pension funds offer great potential for financial security in old age: according to a new Wifo study commissioned by the WKÖ Association of Pension and Provident Funds, even small contributions can have a major positive effect on pension provision. The Chamber of Commerce therefore urgently calls for a complete expansion of the pension fund system in Austria.
The ‘second pillar’ of the pension system
Pension and provident funds are considered the second pillar of the domestic pension system: companies can offer their employees extra security in old age by setting aside a certain percentage of their salary or a fixed amount for pensions. There are three variants: either part of the income is used for premiums, or the employer pays the benefit, as a bonus or supplementary benefit, or – the most common variant – there is a mixed form. In any case, a pension fund manages the assets and later pays out the retirement pensions.
Up to 400 euros more pension per month
The problem: To date, not all companies offer such a company pension. But according to the trade association, full expansion is urgently needed and a new Wifo study supports this demand. Because: Assuming a premium amount of only 2.5 percent of the gross annual salary, the future pension would increase by a maximum of 400 euros per month.
In concrete terms, the initial pension would increase by 15 to 19 percent, depending on the individual income level. For men, who earn more on average than women and could therefore save more with the 2.5 percent, this would mean a monthly pension increase of 320 to 400 euros; for women this would be 160 to 200 euros extra. Wifo examined 28 typical lifetime income curves.
Later supplementary pension
But even a modest indexed amount of 150 euros per year would already have a positive effect on pension provision: there would be an increase in the first pension of between one and nine percent. Depending on demographic characteristics, this would yield a maximum of 150 euros 14 times a year as a supplementary pension at a later date.
Wifo Managing Director Gabriel Felbermayr: “Against the background of increasing demands on the pension system, the company supplementary pension offers enormous potential to secure long-term retirement income in Austria and make it fairer – low incomes in particular would benefit from a pension fund solution. ”
Andreas Zakostelsky, president of the Association of Pension and Provident Funds, emphasizes: “Full expansion is urgently needed now so that usual living standards for retirees can be secured in the future.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
