So-called factoring is currently expensive for new retirees – the later in the year they retire, the lower their inflation adjustment. After fierce criticism from the SPÖ, the federal government is now taking countermeasures – and temporarily suspending the scheme of the first staggered pension adjustment after retirement. Social Affairs Minister Johannes Rauch (Greens) and ÖVP club president August Wöginger announced this on Wednesday after the cabinet meeting. A corresponding application will be submitted to the National Council on Thursday.
High inflation is cited as the main reason, which also puts a heavy burden on pensioners. You’re now making sure the seniors get the full raise and providing “help to anyone who really needs it,” Rauch said. The current arrangement is “normally” not a problem when inflation is low, but the current price increase leads to disadvantages – so it would be worse with new retirees, the minister continued.
Model would be at a clear disadvantage at this point
The factoring means that in the first year after retirement you will only receive the full increase if you retire in January. Otherwise, the plus decreases from month to month: if the retirement date is in February, then the pension increase will not be settled in full, but only 90 percent, in March 80 percent, etc. You will not receive an increase in November or December in the first year. Above all, the SPÖ and the trade union have long been demanding the abolition of this arrangement.
Since the first pension payment also forms the basis for future increases, the long-term effect of the indexation rule is mainly negative at very high inflation, according to the government. According to this data, about 100,000 people in Austria will retire this year. For them, high inflation would have put them in a “significantly worse position”. About 200,000 people will be affected by the scheme regardless of when they retire, Rauch continues.
According to the press release, the Ministry of Social Affairs also expects a high pension increase for the coming year due to the current inflation. It is calculated on the basis of the average inflation rate in the period from August to July of a year and is estimated at nine to ten percent for the coming year.
For 2024, current economic forecasts indicate that inflation will be above average again. “That is why the partial quota system is now completely suspended for two years. Some 200,000 people who retire in the next two years will receive the full pension increase – regardless of the month in which they retire,” the ministry said.
Women in particular should benefit from this
Women in particular will benefit from the new scheme: due to the gradual increase in the statutory retirement age from 2024, they will only be able to retire in the second half of the year and would have had particularly serious disadvantages due to the partial supplement.
The suspension of the statutory employee participation scheme is the result of an amendment to the General Social Security Act (ASVG), which will be decided this week by the government parties in the National Council. ÖVP club president also allowed himself a small tip against the SPÖ. The party wanted to debate the issue this Wednesday through an “urgent” meeting in the National Council – but that had become “unnecessary”, according to Wöginger, who spoke of a “fair and social solution”.
Source: Krone
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