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Austrian MPs pass pension reform bill

AUSTRIA – The Austrian parliament has passed the controversial pension reforms bill, although chancellor Wolfgang Schuessel had to concede on key points to calm rebellion among the two coalition parties.

Ninety-five members of parliament from the right-wing conservative coalition of the OeVP and the FPOe voted in favour of the bill, while 86 backbenchers from the opposition social democrat and Green Party voted against the bill.

Tensions among the parties had been rising, as Freedom Party members insisted that concessions should be made regarding the proposed reforms. National strikes and demonstrations had also increased pressure on Schuessel to readdress some of the key points.

Schuessel, who had already agreed to introduce reforms on a more gradual basis in order to appease critics, consented to cap maximum loss in civil servant retirement benefits at 10% rather than the proposed 11%, and to increase a fund to help those with small pensions.

As part of the reforms, the age of retirement for men will be increased from 61.5 years to 65 years, and the age of retirement for women will be increased from 56.5 years to 60 years. The increases are to be introduced gradually from July 2004 to 2013.

Those who decide to retire early will see reductions in their gross pensions increased to 4.2% from the current 3.75%, with early retirement being abolished by 2013. On the other hand, those retiring later will receive a bonus.

Other reforms agreed include a reduction in the rate of contribution increase from two percent to 1.78%. This will now be made in four gradual steps up to 2006.

Austria’s different pensions systems will also be harmonised so that same contributions bring the same rewards.

Although the passing of the pensions reform bill is being regarded as a victory for the government, the unions are still unhappy.

“We will not accept these proposals without a fight. I am calling on all pension organisations to fight with us against the reforms,” said Johann Schmoelz, chairman of the pensions department for National Federation of Austrian Unions, OeGB. It argues that, under the new reforms, pensioners will have less spending power.

The OeGB called the national strike in May in which tens of thousands took to streets – the largest strike seen in Austria since World War II.

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