Voluntary pension splitting is still rarely used – 1.74 percent of births in 2023 involved an application, according to Carmen Treml, economist at the “think tank” Agenda Austria. The measure must be better known, but must not lead to automatic division, as the women’s minister has long advocated.
With voluntary pension splitting, the parent who is not primarily responsible for raising the children and who is employed (in most cases the man) transfers part of the balance in his pension account to the pension account of the other parent. During the first seven years from birth, a maximum of 50 percent of the credit can be transferred; an application for this can be submitted to the pension insurer until the child turns ten years old.
Share “vanishingly small”
The option to split has been available since 2005 and data is available as of 2014, Treml explains. While there were only 67 applications for pension splitting in 2014, in 2023 there were 1,348. In 2023, 1.74 percent of births were accompanied by an application, compared to 0.08 percent in 2014. In the long term, it would appear that the numbers would rise extremely. , but they are still “vanishingly small” compared to births. Overall, the data situation is poor; there are no figures on how much and for how long these are split.
Maximum 1000 euros per year
Treml calculated that a household could receive 500 to 1,000 euros more net annually if pension split, based on average income and a 50 percent distribution over seven years. Unbundling ultimately has a positive effect through tax benefits. However, there are also exceptional cases in which pension splitting is not advisable, for example if a woman earns more, but still takes on most of the childcare. On average, women’s pensions are considerably lower than those of men.
Apply, but not required
Pension splitting is not well known, as it is not actively promoted. A solution would be to decide during a conversation during the birth or during another application whether or not you want to split. “Then parents must deal with it consciously,” says the economist. However, she rejects the automatic pension split, which people should withdraw from; the voluntary character must continue to exist. Women’s Minister Susanne Raab, on the other hand, is pushing for an automatic system, but her Green coalition partner wants a larger package to combat poverty among women.
Austria is conservative and destroys role models
The criticism that pension splitting could strengthen old role models is “very appropriate,” says Treml. However, Austria is a very conservative country. One cannot assume that the classic role models – the woman going on maternity leave and taking on the majority of childcare and household duties – will be broken down within a few years and that there will be a fair distribution. “Nothing changes structurally,” says Treml, but pension splitting results in a financial improvement in most cases. However, structural changes are also needed, such as breaking down role models and providing high-quality child care across the board. The tax system also needs to be revised so that it is worthwhile for everyone to switch from part-time to full-time work.
Source: Krone
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