2024-01-23 16:26:05
Rauch: The pension system remains financially viable in the long term
Vienna (PK) – The sustainability of the Austrian pension system against the background of increasing life expectancy and falling birth rates was the focus of a management audit by the Court of Auditors, which was held today Audit Committee was debated. The audit body sees a need for action, particularly with regard to the functionality of the Old Age Security Commission and the rapidly increasing federal contribution to pensions, as President of the Court of Auditors Margit Kraker emphasized in the committee. Social Minister Johannes Rauch shared these assessments, but viewed the financial viability of the pension system as secure in the context of Austria’s economic performance.
An audit report on the merger of social insurance institutions decided in 2018 was also on the agenda. Accordingly, the savings of €1 billion announced by the federal government at the time did not materialize and were “not plausible” from the outset, as Kraker explained.
Both reports from the Court of Auditors were accepted unanimously. The deputy chairwoman of the Old Age Security Commission and President of the Austrian Senior Citizens’ Association, Ingrid Korosec, and Bernhard Wurzer, General Director of the Austrian Health Insurance Fund (ÖGK), were available to provide information to the MPs.
Court of Audit report on the sustainability of the pension system
The Court of Auditors sees the Austrian pension system as facing a major challenge. In view of increasing life expectancy and falling birth rates, it must ensure, on the one hand, an appropriate level of benefits for pensioners and, on the other hand, affordable contributions from those in employment and an acceptable burden on the federal budget. Whether and how this has been achieved, particularly since the pension reform in 2003 and 2004, was the subject of a management audit by the control body, as was the assessment of the medium and long-term sustainability of the pension system (III-1038 d.B.). The period reviewed included in particular the years 2017 to 2021.
The Court of Auditors particularly criticized the Old Age Security Commission, which was founded in 2017, for failing to implement its statutory mandate in key points. He recommends ensuring its ability to act by appointing the chairmanship in a timely manner and updating its criteria for assessing sustainability. In the report, the Court of Auditors also advocates a clear strategy for legal changes – particularly with regard to the control of the retirement age – and for discipline in pension adjustments. He also advocates a coordinated target for the development of the federal budget, taking into account the rapidly increasing federal contribution to the pension system. This growing contribution in particular, in combination with other budgetary burdens (energy crisis, inflation, etc.), could endanger the financial viability of the federal budget, as the report shows. However, if carefully developed, the Austrian pension system is definitely a suitable basis for the appropriate provision of older people with an acceptable financial burden on the working population and the federal budget.
Minister of Social Affairs Rauch believes that the “doom and gloom” is inappropriate
Social Minister Johannes Rauch also identified a “need for action” in the committee, but considered a “doom and gloom” atmosphere to be inappropriate. The Austrian health system can stand up to international comparison and makes a significant contribution to social peace in the country. The demographic developments, which FPÖ MP Wolfgang Zanger addressed, did place greater strain on the federal budget, but this should be viewed in a differentiated manner in the context of a GDP that has also grown. The pension system will remain financially viable in the long term, said Rauch.
A central measure for this is the alignment of the actual retirement age with the legal one. In order to achieve this, it is important to create age-appropriate working models, as Rauch explained. An expansion of childcare places is also relevant in order to create a better balance between work and family and thus to keep women in employment in particular for a longer period of time. This would also be a means of reducing the “gender gap” in pensions, as Karin Greiner (SPÖ), Ulrike Maria Böker (Greens) and Gerald Loacker (NEOS) asked. According to Rauch, raising the retirement age for women and introducing the early starter bonus also work in this direction and make a decisive contribution to combating poverty in old age among women.
The Court of Auditors’ criticism of the Old Age Security Commission was shared by Social Minister Rauch as well as Lukas Brandweiner (ÖVP), Wolfgang Zanger (FPÖ), who spoke of a “political horse-trading” in connection with the appointment of the chairmanship, and Gerald Loacker (NEOS), for whom the commission was “a joke”. Rauch admitted that there was a delay in the question of the chairmanship, but assumed that the situation would be clarified before the summer.
The deputy chairwoman of the Old Age Security Commission and President of the Austrian Senior Citizens’ Association, Ingrid Korosec, who was invited to provide information, also criticized the commission’s lack of room for maneuver. Ten of the 14 members are employee or employer representatives and four belong to ministries. Korosec, like the Court of Auditors and the MPs mentioned, spoke out in favor of increasing the Commission’s staff with experts from areas such as actuarial science. Korosec also saw the pension system as being secured in the long term and suggested measures to increase full-time employment among women, to expand age-appropriate jobs and to provide qualifications for the unemployed.
Merger of social security institutions under the microscope
In another report, the Court of Auditors focuses on the merger of social security institutions decided by the legislature in 2018 (III-822 d.B.). The audit objectives were to assess the desired reduction in administrative burdens, progress towards harmonization of services and organizational integration. In addition, the financial situation of the merged social insurance institutions was analyzed with particular attention to the COVID-19 pandemic. The period reviewed covers the years 2018 to 2020.
The Court of Auditors concludes that the broadening of the risk community and the aim of increasing the ability of the social insurance institutions to act and to use synergies should generally be viewed positively. However, the plan to save €1 billion would not be sufficiently justified to be used as a basis for the management of the social security institutions. In view of the discrepancy between the actual development of administrative expenses and the forecasts according to the Social Insurance Organization Act (SV-OG), the Court of Auditors recommends taking other measures to achieve the goals or adapting the goals.
According to the report, integration progress varied depending on the subject area and sponsor and the merger efforts were still ongoing at the time of the management review. A nationwide general agreement in the medical sector was not yet foreseeable. In the event of non-agreement, the Court of Auditors will suggest a redesign of the legal framework. Due to the SV-OG, there were also no control bodies for the social insurance providers and their umbrella organization. The audit standards for the audit introduced from January 2020 fell short of those of the control meetings abolished in 2019, criticizes the Court of Auditors. He suggests the legal obligation to set up such control bodies. In addition, the audit body advocates, among other things, clear objectives, particularly regarding any savings and further action, as well as a comprehensible recording of costs and benefits.
Committee debate on “mismanagement of expectations” regarding savings
In the committee, President of the Court of Auditors Margit Kraker emphasized that the 30% savings in personnel and material costs or €1 billion in costs announced by the then federal government in 2018 were not plausible from the outset. The social insurance institutions had not set any savings targets and so additional expenses were recorded rather than savings during the review period. The number of employees was not reduced as a result of the merger. Social Minister Rauch agreed with Kraker and spoke of “incorrect management of expectations” by the federal government at the time. The announced €1 billion in savings had already been called into question in 2018, Rauch replied to SPÖ MPs Philip Kucher and Michael Seemayer. ÖVP mandate Johann Singer was “happy” about what he saw as a successful structural reform and, like Christian Lausch (FPÖ), emphasized that the legal framework created at the time needed to be further developed and the harmonization of services pushed forward.
Regarding the personnel situation, Bernhard Wurzer, General Director of the ÖGK, replied to David Stögmüller from the Greens that 15% of middle and senior managers had already been saved and 18 senior employees had been reduced to four. Wurzer emphasized that with this level of staff, the insurance carriers also had to cope with additional tasks such as the COVID-19 pandemic. All nine medical associations would have to agree to the nationwide overall agreement in the medical sector highlighted by the Court of Auditors and addressed by Ralph Schallmeiner (Greens) in order to reach a conclusion. To achieve this, there should be “no losers” in the negotiations, which, according to Wurzer, will mean “upwards harmonization”.
Furthermore, Philip Kucher (SPÖ) and David Stögmüller (Greens) were interested in consulting contracts worth around €20 million, which, according to Rauch, were handled exclusively in the cabinet of former Federal Minister Beate Hartinger-Klein without the involvement of the specialist sections. Rauch spoke of an “unbelievable process” because these €20 million went to a single company without a tender and no files on it were any longer available. (Continuation of the Court of Audit Committee) wit
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