Gap continues to grow

Payroll tax until November goes on pensions

Pensions are an increasing burden on the budget.(Bild: APA/HELMUT FOHRINGER)

Austria has an expensive pension system - at around 33 billion euros, it is the largest item in the federal budget. Until November 14, all income tax revenue will be used for this. This date is likely to be pushed back even further: The gap will grow to 38 billion euros by 2029, despite reforms.

While the entire VAT revenue in Austria is used for subsidies, almost the entire income tax revenue is used for subsidies to the pension system.

The subsidies from the budget are the amount that the state has to take into its own hands, as they would otherwise be missing from the system: on the one hand the subsidy to the ASVG system, as the contributions paid in are not enough, and on the other hand the civil servants' pensions.

Pensions are an increasing burden on the budget.(Bild: APA/HELMUT FOHRINGER)

The "day of the pension gap"
"Around nine out of ten euros go into the pension system," says Agenda Austria expert Denes Kucsera. Converted to a year, November 14 would be "Pension Gap Day"; all income tax revenue collected by the state up to this date goes into the pension system. Three quarters of the revenue is divided between employees and one quarter between pensioners.

(Bild: Krone KREATIV)

The date shifts further and further back as the subsidies grow. "By 2029, the subsidies will grow to 38 billion euros," says Kucsera. The pension reform agreed by the coalition - in particular the postponement of the corridor age - is slowing down the increase, but the momentum remains high. "Added to this are higher expenses for care and health." 

Kucsera is calling for an increase in the retirement age. It is clear that reforms will only have a strong impact in the long term, unless there is intervention for existing pensioners. "But a reform must happen now so that it can actually save billions in a few years' time," emphasizes Kucsera.