Austria set to boost second pillar
AUSTRIA - Employees might soon find their bonuses going into a pension fund rather than cash into their hands.
The new model, suggested by finance minister Wilhelm Molterer, could initially affect up to 350,000 or under 10% of working Austrians.
Molterer's suggestion was picked up by chancellor Alfred Gusenbauer who said that in a first stage the conversion of cash bonuses into pension fund assets should happen via an incentive model.
Later, it could form part of collective agreements between unions and employers on industry-wide wage agreements. "And once you have it for as long as Switzerland does now, it might even become law," he added.
The chancellor stressed that the introduction of the suggested model will not lead to any changes to the first pillar pension system. According to the OECD Austria is among the countries with the highest replacement rate offered by its state pension system.
"There will be no changes to the state and private pension provision but they will be complemented by stronger occupational pension schemes," Gusenbauer said.
According to a small sample among companies taken by the Austrian economic chamber, between 10 and 20% of the workforce are currently are eligible for bonus payments or are holding a stake in the company which includes a profit share. However, projected onto all businesses the figure is estimated to go down to under 10% but rising.
Gusenbauer and Molterer's suggestion was applauded by the conservative employee representative group, ÖAAB but the social democratic union body, ÖGB warned that second pillar pension provision must never replace the full provision of pension by the first pillar.
Fritz Janda, head of the Austrian pension fund association said he welcomed Gusenbauer's announcement. But he urged the government to introduce a new tax model for pension contributions which would see taxation deferred to when employees take out the money from the pension fund.
Gusenbauer and Molterer are heading the Social Democrats SPÖ and the Conservatives ÖVP respectively which form the current coalition government in Austria.