'Greedy' pensioners spark row in Austria

28th September 2009, Comments 0 comments

"Old, but greedy," ran a recent headline in the monthly magazine Profil after pensioners called for a hike in their pensions.

Vienna -- Austria's pensioners have come under fire for calling for a 1.9-percent rise in their pensions next year, while the cost of living in the Alpine republic -- as elsewhere in Europe -- is stagnating or even falling.

"Old, but greedy," ran a recent headline in the monthly magazine Profil.

And the head of the Austrian industry federation IV, Veit Sorger, slammed the pensioners' demands as "asocial."

Their claims, Sorger warned, could tear to shreds not only the intergenerational contract on which most modern pension systems are built, but even the very fabric of society if young people grow restless at having to foot the ever-growing pension bill.

Karl Blecha of the Social Democrat pensioners' federation PVOe and his conservative counterpart Andreas Khol see nothing outrageous in their demands.

"Our demands aren't absurd, we're just seeking to safeguard the value of our pensions," said Blecha.

"We're not being brazen. All we're asking for is an adjustment in small and medium-sized pensions. This isn't a fight between the generations," Khol insisted.

Experts see it differently.

"The point of a welfare state can't be that a single generation takes it into the grave with them," said sociologist Bernd Marin.

"If we carry on the way we're going, the pension system will become a sort of pyramid scheme with each successive generation getting less and less. People born after 1970 won't get even half of what they've paid into the system in contributions," Marin said.

A recent study by economic think-tank WIFO calculated that pensions are already tearing an ever bigger hole in the budget -- at a time when the economic crisis makes belt-tightening inevitable.

While pensions accounted for 18.3 percent of budget spending in 2000, the proportion will be 22.8 percent next year and will continue to rise, especially as the population ages.

This year, the state is set to pay out 13 billion euros (19 billion dollars) in pensions, more than it spends on schools and universities.

In 2008, out of Austria's total population of 8.3 million, close to two million were aged 60 and over.

And Austrians are getting older: with every year, men add 122 days to their life expectancy and women 120 days.

At the same time, people are retiring earlier, with the average Austrian retiring at 58.1 years, a month earlier than in 2002.

The current retirement age in Austria is 65 for men and 60 for women. But under a pension reform in 2002-2003, a special rule was introduced, called the "Hacklerregelung." Under this rule, men born before 1954 can retire early if they have paid at least 45 years of contributions and women born before 1959 can retire after 40 years of contributions.

In of one of the last acts of the previous government before the September 2008 general election -- just before the global economic crisis broke out -- that rule was extended until 2013, in a move experts estimates could cost a further 800 million euros.

More and more Austrians are taking advantage of early retirement.

In the first half of this year, the number of people in their late 50s who applied for an early pension amounted to 15,000, the same number as in the whole of 2008.

Indeed, Austria could soon beat France as the world champion in early retirement. In all other OECD (Organization for Economic Co-operation and Development) countries, the trend is for people to retire later and later.

With one of the lowest birth rates in Europe, the number of retirees per 1,000 workers in Austria is projected to rise from 260 next year to as many as 506 in 2060.

Chief lobbyist Blecha hit out at scaremongering by the media on pensions.

"It's only self-appointed experts who talk about the unfinanceability of the pension system. But it continues to function month after month."

Given their political weight -- out of Austria's 6.3 million voters, nearly a third are aged over 60 -- politicians are looking to placate the pensioners.

In a recent speech, Chancellor Werner Faymann said different generations should not be played off against each other.

And the Social Democrat candidate for provincial elections this weekend in Upper Austria, Erich Haider, is also looking to win the pensioners' vote.

The older generation helped rebuild Austria after World War II, and "now we have to be there for them," he said.


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