Economist against obligation

Pension splitting is still rarely used

A household with pension splitting can receive 500 to 1000 euros more net per year.

(Bild: stock.adobe.com - Petro)

Voluntary pension splitting is still rarely used - 1.74% of births in 2023 were accompanied by an application, according to Carmen Treml, economist at the think tank Agenda Austria. The measure should become better known, but not turn into automatic splitting, as the Minister for Women has long been calling for.

With voluntary pension splitting, the parent who is not primarily responsible for bringing up the children and is in employment - in most cases the man - transfers part of his pension account credit to the pension account of the other parent. Up to 50 percent of the credit can be transferred for the first seven years from birth; an application for this can be submitted to the pension insurance institution until the child reaches the age of ten.

Proportion "vanishingly small"
The option of splitting has been available since 2005 and data is available from 2014, explained Treml. While there were only 67 applications for pension splitting in 2014, there were 1348 in 2023. 1.74% of births were accompanied by an application in 2023, compared to 0.08% in 2014. Over time, it would appear that the figures are increasing dramatically, but they are still "vanishingly small" compared to the number of births. Overall, the data is sparse, there are no figures on how much and for how long splitting takes place.

Over time, it looks as if the figures are increasing dramatically, but they are still negligible compared to the number of births.

Carmen Treml, Ökonomin beim „Thinktank“ Agenda Austria

Up to 1000 euros a year
A household with pension splitting could receive 500 to 1000 euros more net per year, Treml calculated, assuming an average income and splitting of 50 percent for seven years. The splitting would ultimately have a positive effect through tax benefits. However, there are also exceptional cases in which pension splitting is not advisable - for example, when a woman earns more but is still responsible for the majority of childcare. On average, women's pensions are significantly lower than men's pensions.

Apply, but don't force it
Pension splitting is not well enough known, as it is not actively advertised. One solution would be for people to decide whether they want to split or not during a discussion at the time of the birth or when making another application. "Then the parents have to consciously deal with it," said the economist. However, she rejects automatic pension splitting, from which one would have to opt out - it should remain voluntary. Women's Minister Susanne Raab, on the other hand, is pushing for an automatic system, although the Green coalition partner wants a larger package to combat poverty among women.

Austria conservative - breaking down role models
The criticism that pension splitting could reinforce old role models is "entirely appropriate", said Treml. However, Austria is a very conservative country. It cannot be assumed that traditional role models - the woman goes on maternity leave and takes on the majority of childcare and household duties - will be broken down in a few years and a fair division will prevail. "Structurally, nothing will change," said Treml, but pension splitting will bring a financial improvement in most cases. However, structural changes are also needed, such as breaking up role models and comprehensive, high-quality childcare, and the tax system also needs to be changed so that it is worthwhile for everyone to increase their part-time hours to full-time.