Retirement age – Retiring too early costs the state billions

Austria has a particularly expensive pension system; measured in terms of economic output it is the fourth most expensive system in the EU. Other welfare states such as Sweden need considerably less there; 7.4 percent of GDP goes to pensions, while in our country that is 13.7 percent. The reason: people work longer there and their actual retirement age is closer to the legal age. In Austria, the average starting age for men is around 62 years and for women around 60 years.

On average, citizens within the OECD actually retire two years later. “If everyone worked for us until their normal retirement age, this would suddenly generate ten billion euros per year. This means that this is where the big lever lies,” says Ingrid Korosec, head of the association for black seniors. In an international comparison, the difference between the legal and the actual starting age is particularly large.

Sweden as a role model
As far as Sweden is concerned, we can also learn a thing or two, says Neos MP Sophie Wotschke: “From the age of 63 you can freely choose when you retire. The rule is that those who quit early get less, and those who quit later are rewarded.”

Above all, Korosec demands that politicians pay attention to the healthy years of life after retirement: “More than 40 percent of people retire due to illness or unemployment,” Korosec emphasizes. Many women also work part-time for a very long time and only realize too late what impact this has on their pension. 30 percent of Austrians work part-time, and this number is significantly higher for women.

Flat tax for working at an older age
Incentives for longer working hours are important, as other countries have already shown. The seniors representative has long supported Chamber of Commerce President Harald Mahrer’s proposal to introduce a 20 percent flat tax for working after retirement. “Many people say it doesn’t pay for them to work at an older age, so we need reforms,” says Korosec. If, as a retiree, you have little chance of remaining in the labor market for longer due to high taxes, this often acts as a deterrent. “Older workers would be of great value to the labor market.”

Mechanism for a higher starting age also legal
Wotschke also sees the problem mainly in the actual retirement age. In the coalition negotiations, her party therefore came up with a compromise proposal to introduce a mechanism by which the starting age will automatically increase gently from 2034 if the actual age does not rise as desired by then. Even if the real need for action lies in the actual starting age, there is no long-term option to raise the legal age or link it to life expectancy, as is already the case in a quarter of OECD countries.

Higher health insurance premiums only in the total package
Regarding the current discussion about increasing health insurance premiums for retirees, Korosec makes it clear: “In principle we are against increases. But if all population groups contribute, retirees will also be ready. Most importantly, with an increase there must also come improvements in the healthcare system and not only seniors should be asked to pay,” says Korosec, who certainly recognizes the rising costs in the healthcare system and the increased need for financing. For Wotschke, an increase “would be the right step, as long as resources are used wisely and effectively, thus relieving pressure on the budget.”

Korosec: The ‘real’ pension costs are lower
Korosec emphasizes in general that he is not opposed to reforms in principle, not even in the pension system, but wants an objective discussion. Of the always mentioned 33 billion euros subsidy in the pension system, only three quarters are ‘real’ pension costs for Korosec. You can see what is included in the statutory pensions:

Nearly three billion euros are benefits for rehabilitation and health care, as well as compensation. “These are social benefits that fall under pension costs. “That makes them look particularly tall,” says Korosec. Costs for reintegration and childcare are also included in the pension costs, Korosec criticizes. She sees a danger in the current pension discussion: “If young people constantly feel that they have no chance of a pension, they will be less willing to pay contributions and work full-time,” warns the pensioners’ representative.