Andreas Treichl and Hartwig Löger call for a broad, open discussion on the restructuring of Austria’s state pension system 

Following the results of a recent international study by EcoAustria Institute for Economic Research, Löger and Treichl want to reopen the debate about fundamentally reforming the pension system and tackle it from a more objective perspective. The study will form the basis of further activities of ERSTE Foundation and Vienna Insurance Group (VIG). The aim is to initiate a transformation process—through broad public discussion and without ready-made solutions—that will make Austria’s pension system more efficient and strengthens Austria’s competitiveness.

Austria has a good pension system that is generous compared to those in other countries, one of its strengths is its redistributive effect. In the future, however, it will be much more difficult and expensive to maintain it. While Austria’s spending on pensions is well above the EU average and continuing to rise, benefits are set to fall — circumstances that have been discussed repeatedly but not addressed effectively thus far. Andreas Treichl, Chairman of the Supervisory Board of ERSTE Foundation, and Hartwig Löger, CEO of Vienna Insurance Group (VIG), have taken up the subject. The EcoAustria study they commissioned compares eleven European pension systems with a view to providing the first concrete starting points for bringing about effective pension reform in Austria.

“The aim of the study was to understand what sustainable solutions for secure pension systems other European countries have in place. By doing this, we hope to make the ongoing discussion around our urgently needed pension reforms more objective and take it to the next level. We believe it is possible to fundamentally improve the Austrian pension system and consequently find a fair long-term solution for future generations. Other European countries such as Denmark and Sweden are showing us the way”, says Hartwig Löger.

It is well known that Austria’s spending on pensions needs to be funded by the state budget. Currently, Austria’s public spending on pensions is the fourth highest in the OECD and well above the EU average. Without reform, this spending will continue to rise. Monika Köppl-Turyna, Director of EcoAustria, comments on the country comparison: “It is often argued that spending increases will only be moderate. But even small rises will not be without consequences: The average pension will fall relative to the average salary and the risk of poverty in old age will therefore increase. Our comparison with other countries and their pension systems shows that including funded components can safeguard pensions in a sustainable manner. Funded pension schemes are intended to supplement or further develop the existing contribution-based pension system. Under the funded principle, assets are accumulated and invested on the free capital market in order to draw a pension or lump-sum benefit at a later date.”

For example, the ratio of average pension to average wage (benefit ratio), is 61 percent in Denmark and 67 percent in the Netherlands, but only 56 percent in Austria. Both the Netherlands and Denmark make use of partially funded pension schemes, thereby easing the burden on their state budgets.

Andreas Treichl remarks on the call for reform: “We want to find the best pension system for Austria. The study provides a good basis for assessing alternatives more accurately and more transparently, and for discussing in an unbiased manner whether and in what form they might be suitable for Austria. As the countries studied show, having funded components in a pension system can secure a high standard of living. They also have a very positive side effect in that needing to set aside less money for pensions in the budget frees up more money for other issues such as the transition to a green economy. It is vital that we stop wasting time and start seeking out new solutions in close consultation with all relevant social groups. Why go round in circles discussing the retirement age when we could seize upon the opportunity to significantly improve the current system?”

A first and important step in this direction was taken at this year’s European Forum Alpbach, where experts from a wide range of institutions offered extensive reflections on pension reform. Together with the findings of the study, these discussions will form the basis of a series of round table discussions among experts. The aim is to draw up concrete proposals for reforming the Austrian pension system by mid-2025. ERSTE Foundation and VIG will provide the framework and infrastructure for this dialogue. 

The complete study is available for download here on the VIG website.

Here you can find photos of the press conference.