A total of €25.70bn was allocated from Austria’s 2023 budget to finance pensions, representing 23.5 per cent of total budget expenditures and 5.43 per cent of GDP.

This already made the pension subsidy one of the largest federal budget expenditures, and due to demographic change, increasing life expectancy, and a simultaneous decline in the birth rate, this figure is now at 25 per cent, according to PensionsKasse.

The group forecasted that the total subsidy rose to €30.03bn in 2024 and will hit €32.40bn in 2025.

This would mean that almost a third of total pension expenditures would have to be financed directly from the federal budget.

The amount of the budget subsidy for pensions varies depending on the pension insurance provider.

It is particularly high for civil servant pensions: At €11.54bn, a large portion of the total subsidy is allocated to this area.

However, PensionsKasse suggests that costs in this area will gradually decrease – following a reform, civil servants will increasingly be included in the ASVG (General Social Insurance Act) system. This, however, will increase the subsidy there.

Indeed, in 2023, the subsidy for pensions in the ASVG sector (blue-collar and white-collar workers) amounted to €9.06bn, with a comparatively high coverage rate of 81 per cent.

In contrast, the coverage rate for pensions of the self-employed (GSVG and FSVG) was significantly lower at 49 per cent - the subsidy was €2.84bn in 2023, while the Farmers' pensions (BSVG) had a coverage rate of 19 per cent (€2.26bn subsidy).

The financing of the Austrian pension system has been at the centre of the budget policy debate for several years, and questions about the sustainability and financial viability of the domestic pension system are becoming increasingly louder.

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