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Austrian pension reform back to square one after commission dissolved

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The commission advising the Austrian government on the reform of the pension system is to be “restructured”, with entirely new members being selected in the coming months.

The commission – comprising politicians and representatives from unions and employers – was mandated earlier this year to look into all three pillars of the pension system, instead of just the state pay-as-you-go system.

Its members have publicly fallen out, however, over estimates on the development of first-pillar funding for the coming years.

Representatives for the left-of-centre SPÖ party have argued that increasing the first pillar’s state subsidy will be “manageable”, while the right-of-centre ÖVP has warned of “massive” funding problems in the PAYG system.

Both sides have accused the other of injecting politics into the interpretation of statistics. 

According to figures compiled by the SPÖ-led Social Ministry, the state subsidy to ensure pension payments from the first pillar will increase by 50 basis points over the next two decades, as the reforms of the civil servants pension take effect.

In recent years, a generous civil servant pension scheme based on tenured contracts has been phased out, with all new federal employees accruing benefits equal to those of other employees.

However, Martin Gleitsmann, head of the social policy and health department at the Austrian Economic Chamber, argues that the share of overall pension payments in the state budget will reach approximately 33% by 2019 from its current 24%.

He has also warned that this development is set to accelerate from 2020.

In the wake of the brouhaha, the government has decided to dissolve the commission, although it claims the timing is “coincidental” and that the restructuring had been on the cards as early as last year.

According to the government agenda, the commission is to include more experts on second and third-pillar pensions, for a more “holistic view” of the system.

The government has not said whether the commission’s dissolution will effect its target of producing a pension-reform proposal by 29 February 2016.

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