The pension system is becoming noticeably more expensive. If the public sector has to contribute 10.2 billion this year, next year it will be 14.1 billion – and things will continue in this direction, PVA general director Winfrid Pinggera warned at a press conference on Tuesday. He again advocated the transition to the statutory retirement age. Recently observed improvements for policyholders are also responsible for this trend.
For example, the protection clause, which is intended to prevent an impending loss of value due to insufficient appreciation given current inflation for the coming pension cohort, will cost this group of affected people three billion euros for life. After all, it is currently expected that 100,000 people will retire within a year. The fact that women can retire six months earlier thanks to a new term scheme costs a billion.
Such measures contribute to further increasing the costs of the system. By 2027, the federal contribution, which corresponds to the federal government’s liability in the event of default, is expected to more than double. There are also contributions for people who are partially compulsorily insured, such as people on maternity leave, in the army or in prison, as well as the costs for compensatory benefits, which are also not covered by premiums. These two factors together currently amount to more than four billion per year.
Demographic effect causes pension costs to explode
Anyone who thinks that the extra four billion that will have to be spent next year is solely due to the recent significant pension increase is wrong, according to Pinggera. Only one of them is directly related to this. The rest comes from the demographic effect. In any case, the income is currently high thanks to the high premium income.
During the press conference, Pinggera also drew attention to the effects of a current topical issue, namely the trend towards part-time work. Two factors come together here: one would optimize their work-life balance, the other would optimize their salaries, because with more work and therefore more money they would have to fight for help again and ultimately get nothing out of it.
Part-time significantly reduces the pension
But the effect on pension benefits is overlooked. Here is an example of a woman with an average income and 40 years of contributions: If she works full-time all the time, her pension is 2,136 euros. However, if she works part-time for ten years (50 percent), the benefit is reduced to 1,869 euros. If she works part-time for 20 percent of her career, her pension drops to 1,602 euros, which is at least 25 percent less than for full-time employees. This does not matter for the system. The level of coverage through contributions is comparable for all three women.
Another interesting detail concerns parents. With a flat income curve, the pension with children is higher than without – thanks to the replacement times during childcare.
Source: Krone
I am Ida Scott, a journalist and content author with a passion for uncovering the truth. I have been writing professionally for Today Times Live since 2020 and specialize in political news. My career began when I was just 17; I had already developed a knack for research and an eye for detail which made me stand out from my peers.
