Economics at your fingertips  

Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness – An Assessment of Austria's New Pension System

Markus Knell ()

Monetary Policy & the Economy, 2005, issue 1, 23–42

Abstract: This study discusses important elements of Austria's recently harmonized statutory pension system. In particular, the author investigates in how far the new system responds to the twofold demographic challenge of declining birth rates and increasing life expectancy and what this means in terms of fiscal sustainability and intergenerational redistribution. Austria's defined benefit system is found to have more in common with Germany's system of earnings points than with Sweden's notional account system — with the exception that the sustainability factor, the adjustment mechanism triggered by demographic changes, has been designed differently in Germany and in Austria. A critical analysis of the Austrian provisions identifies the following problems: First, the application of the sustainability factor is activated only by deviations from projections and not to demographic movements as such. Second, adjustments are not to be automatic. Third, the requirement of an “even adjustment7” is not spelled out in detail. Fourth, it is doubtful whether evenness is a desired feature in the first place since generation-specific reproductive behavior is neglected in this scenario. Overall, the basic structure of Austria's new model gets a favorable rating, as it increases the degree of intergenerational fairness, supports individual, intersectoral and international flexibility and corrects some design flaws of the old pension regime. Conversely, weaknesses are identified with regard to the transitional arrangements, the contribution side and the sustainability factor.

Keywords: Pension; System (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link) ... ses2_tcm16-26924.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Monetary Policy & the Economy is currently edited by Doris Ritzberger-Gruenwald and Ernest Gnan

More articles in Monetary Policy & the Economy from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Claudia Kwapil ().

Page updated 2019-10-25
Handle: RePEc:onb:oenbmp:y:2005:i:1:b:2