Pensions will lead to substantial additional costs in the medium term, according to the new Medium-Term Report presented by the Pension Security Commission on Friday. Over the next five years, Austria will need to spend nearly seven billion euros more on pensions—five billion for statutory pension insurance and approximately 1.8 billion for civil servant pensions, as reported by the Ministry of Social Affairs. These figures represent 0.2% of the GDP.
The experts attribute the rise in costs to factors such as high inflation, weak economic forecasts, and a growing number of people reaching retirement age in the coming years.
In their new long-term report, the Commission predicts a relatively stable future development. The federal contribution to statutory pension insurance is expected to increase from 2.7% of GDP in 2023 (excluding the supplementary allowance) to 6.2% by 2070. The peak is expected around 2060, with 6.5%. Meanwhile, the spending on civil servant pensions will decrease from 3% to 0.6% of GDP. Overall, federal contributions to pensions will increase by 1.1% of GDP by the end of the forecast period.
A major challenge in the statutory pension system, which covers employees and self-employed people, is that total revenues are growing much slower than expenditures. While revenues are expected to increase from 9.4% to 10.3% of GDP by 2070, expenditures are projected to grow from 11.7% to 16.2% of GDP, before slightly decreasing again by 2070.
The so-called pension burden ratio will also rise significantly, from 584 pensions per 1,000 insured persons to 736 by 2070.
For civil servants, expenses will continue to rise until the middle of the decade, but will then drop significantly. From a peak of 15.5 billion euros, they are expected to shrink to 5.4 billion by the end of the forecast period. Contribution income, however, will only decrease by 0.4 billion euros.
For Social Minister Johannes Rauch (Greens), the report proves that pensions in Austria are secure in the long term. However, members of the NEOS party, currently in coalition negotiations, disagree. Pension expert Johannes Gasser stated on X that there is “enormous need for action.” He criticized the Commission for not providing corresponding recommendations.
The EcoAustria Institute shares a similar view. Given the current budgetary situation in Austria, they recommend that contributions for pension system consolidation be made as early as 2026, with adjustments below the inflation rate and an increase in the retirement age.
The Momentum Institute, associated with the trade unions, proposes a different approach. They suggest that the focus should be on keeping more older workers employed until age 65, which could save about 30 billion euros in pension costs by 2040. They also recommend a part-time pension, a fairness contribution for companies with too few older employees, and higher taxes on luxury pensions.
