In Austria, old-age pensions are on average 55 percent higher than in Germany.
Berlin In pension debates, Austria is often cited as a shining example for Germany, because pensions in the Alpine republic are significantly higher than in Germany. A report by the German Institute for Economic Research (DIW) shows that this not only has to do with a higher contribution rate, but also a lot with immigration.
In 2018, retirees in Germany received an average of around 1000 euros per month, in Austria it was 55 percent more at 1550 euros. The higher contribution rate in Austria – 22.8 percent compared to 18.6 percent in this country – does not even explain half of the difference.
Differences in the tax subsidy are hardly significant. If the Austrian rate were applied in Germany and the federal subsidy increased proportionally, the average pension would still be well below that in the neighboring country at a good 1200 euros.
What is more decisive is that the income subject to contributions per pensioner is higher in Austria than here. On the one hand, this is due to the fact that the self-employed or civil servants in this country do not pay in, while Austria basically has an employee insurance scheme, i.e. all employees pay in.
On the other hand, there is also a significantly longer waiting time. Pension entitlements are only acquired by those who have paid in for at least fifteen years. In Germany, the minimum insurance period is five years.
As a result, many employees in Austria – for example commuters from neighboring countries – pay into the system but are not entitled to a pension because they have not completed the waiting period. This increases the pension payments to the others. According to the DIW, 125 euros of the difference of 550 euros are due to the longer waiting time.
Read more about retirement benefits
Another reason for the comparatively higher contribution income per pensioner is that the population in Austria is younger than in Germany because the Alpine republic was more successful in terms of immigration in the first decade of the century. If Germany had a younger population than its neighboring country, the current level of benefits could be financed with a contribution rate of 14.8 percent, the DIW researchers calculate.
Although Austria will age faster than Germany in the future, the ratio of citizens of working age to pensioners will remain more favorable than in Germany until the end of the projections in 2060.
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