The project analysed the effects of an increase of the minimum pension top-up in Austria beyond the poverty threshold. The minimum pension top-up plays a central role in the Austrian social security system. Its level is not only relevant for pensioners in the statutory pension insurance and in the civil servants' pension system, but also for example for recipients of social assistance or recipients of unemployment benefits.
In a short overview the role of the minimum pension top-up within the Austrian system of social security was mapped.
For the analysis of the effects of an increase of the minimum pension top-up the tax-/benefit microsimulation model EUROMOD for the policy system 2023 was used based on EU-SILC 2021 data provided by Statistics Austria. The direct (monetary) consequences of the increase were analysed for pensioners and receivers of social assistance on two levels:
In addition, the benefit of recipients of unemployment benefit and assistance and related budgetary costs were estimated on the basis of aggregated PES-data.
The parameters of the increased minimum pension top-up for single persons (with a corresponding adjustment of the other standard rates) are:
- Scenario 1: corresponding to the calculated at-risk-of-poverty threshold for 2023: € 1,398 (uprated with CPI including inflation forecast for 2023);
- Scenario 2: between the current level (€ 1,110.26) and the calculated at-risk-of-poverty threshold for 2023: € 1,250.
The minimum pension top-up is paid 14 times a year, so the € 1,398 correspond to a monthly at-risk-of-poverty threshold of € 1,631 (=1,398*14/12).
As a result, the increase in the minimum pension top-up in scenario 1 (2) would cause additional costs of about € 2.3 (1.0) billion, of which about € 1.7 (0.7) billion would be accounted for by pension insurance and about € 0.5 (0.3) billion by social assistance/minimum income benefit. About 600,000 (500,000) households with more than 1.1 (0.9) million persons would benefit from the increase. 49 (48) % of them are women, 37 (36) % men and 14 (16) % children.
The at-risk-of-poverty rate for the total population would fall by around 4 (2) percentage points in scenario 1 (2) from around 14% to around 10 (12) %, and that for persons over 60 by as much as more than 10 (5) percentage points. By household type, the risk of poverty would decrease most for single women and men over 65 and for single parents. Looking at the change in household disposable income (household level) or weighted equivalized income (individual level), the increase in the minimum pension top-up in both scenarios would particularly benefit households or individuals in the lowest three income deciles.
On the basis of aggregate PES-data, it is estimated that the costs of an increase in the minimum pension top-up in the framework of the unemployment insurance would amount to about € 50 (25) million in scenario 1 (2) . About 70,000 (45,000) persons would benefit from the reform. However, changes would only occur in the daily rate groups around the old and new minimum pension top-up amounts, i.e. not for unemployment benefit and unemployment assistance recipients with the lowest daily rates.
Financing the increase in the minimum pension top-up could most likely (as it currently is) come from federal tax revenues. Since, according to a study by the Ministry of Social Affairs and the OGM, the funds currently used for the graduated indexation of pensions (higher indexation of lower pensions) hardly have a poverty-preventing effect, they could be redirected toward a (further) increase in the minimum pension top-up.
