Austria provides a comprehensive system of social security and welfare schemes. The network operates at two levels. First, there is the principle of insurance, which provides cover for all gainfully employed persons, and to a large extent for their dependents in cases of sickness, accident, unemployment, parental leave, and pensions, and, secondly, there are public welfare benefits made available by the federal, provincial and municipal authorities to citizens in need, who are not covered by the insurance system.
1. Social Insurance
The social insurance system is the most important part of the Austrian social security system. Social security means protection against various risks in life, such as illness, accidents, the inability to work and the problems of old age, as well as the related consequences.
The social insurance system is the most significant element in the field of social policy with regard to both the number of persons protected as well as the amount of money involved.
In a narrower sense, the social insurance system in Austria consists of:
- the statutory pension insurance system;
- the statutory health insurance system, and
- the statutory work accident insurance scheme.
Reform of the Social Insurance Institutions 2019-2020
The Social Insurance Organisation Act (SV-OG) has led to the restructuring of the social insurance institutions. These are the institutions that are tasked by the state to implement legislation on social insurance. Further information on the reform is provided in the section on the structural reform of the social insurance system
2. Pension Insurance
Credits for Time Spent Bringing Up Children and Pension Splitting
Many mothers and fathers limit their employment in order to dedicate themselves to looking after and bringing up their children.
TYPES OF PENSION
In Austria, a differentiation is made between own pensions (based on one’s own insurance record) and survivors’ pensions.
PERIODS SPENT BRINGING UP CHILDREN IN PENSION INSURANCE
Insurance periods not only include those periods during which contributions were made (contributory periods); time spent bringing up children also counts as insurance periods. Time spent bringing up children is principally credited to the parent who actually and predominantly brings up the child.
In pension insurance, up to four years (48 months per child, and 60 months in cases of multiple births) are credited as time spent bringing up children. This arrangement closes gaps in people’s insurance record and increases their subsequent pension entitlement. For time spent bringing up children, a contribution base of 1.986,04 Euro per month (2021) is used and is credited to the person’s pension account. This figure is adjusted annually (increased).
No difference is made here between biological children, step children, adopted and foster children.
If time spent bringing up children overlaps with the birth of another child, the time spent bringing up the first child ends with the beginning of the time spent caring for the second child.
If a person is employed during the time spent bringing up children, this period is taken into account as a so-called simple insurance period. However, when the person’s pension is calculated later on, the contribution base set for the time spent bringing up children is added to that from employment.
VOLUNTARY PENSION SPLITTING
Since 2005 it has been possible to divide up a pension voluntarily. Here, the parent who works and is not predominantly dedicated to looking after the child(ren) can – for the first seven years – have up to 50 percent of their pension credit amount transferred to the pension account of the person who is predominantly looking after the child(ren).
A transfer of this kind can be applied for at the relevant pension insurance institution until the 10th birthday of the youngest child. This scheme was introduced in order to voluntarily compensate for the loss suffered by one parent due to their reduced employment by balancing the pension accounts of the two parents in this way.
How Much Can Be Transferred?
The transfer amount can be set for each individual year.
However, the following limits have to be observed:
- Only credits from employment can be transferred. Credits from insurance cover due to unemployment, sick leave, maternity leave or transitional benefit, military or alternative civilian service, bringing up children or voluntary insurance are not transferable.
- A maximum of 50 percent of the credit from employment can be transferred in each calendar year.
- Only so much can be transferred that in the pension account of the receiving parent the annual ceiling on insurable earnings is not exceeded.
- The transfer can take place as an amount or as a percentage of the credit. The permissible amount is calculated by the relevant pension insurance institution.
- Transfers are possible for a maximum of 14 calendar years.
PENSION INCREASES
To ensure that the purchasing power of pensions remains intact, they are always multiplied by the statutory adjustment factor on 1 January of each year.
The adjustment factor is based on a reference value. The reference value for pension adjustments is set in such a way that the increase in pensions corresponds to the rise in consumer prices.
The reference value for 2021 has been set at 1.015. However, in 2021 the pension adjustment will deviate from the reference value. Hereby the Austrian Parliament followed a government proposal to strengthen the income of small and medium pension recipients.
The 2021 pension adjustment includes a sliding scale which increases smaller pensions considerably:
- Smaller pensions up to EUR 1,000 will be increased by 3.5 percent.
- Overall pensions from EUR 1,000 up to a pension amount of EUR 1,400, are linear depreciated from 3.5 percent to 1.5 percent.
- Pensions from EUR 1,400 up to EUR 2,333 are increased by 1.5 percent.
Pensions above EUR 2,333 are increased by a fixed amount of EUR 35.
PENSION PROVISION
Pension provision in Austria is based on three main elements: statutory pension insurance, company pensions and private pension plans.
Alongside statutory compulsory insurance for all those in employment, company and private pension schemes contribute towards creating a financial safety net and maintaining living standards in retirement.
COMPANY PENSION
Company pension schemes are a voluntary social benefit provided by employers. As part of an employment relationship, employees can join a pension scheme and thus build up an additional pension. When an employment relationship ends, the entitlement of the employee is retained.
The Company Pension Act (BPG) lays down separate labour law provisions for company pension schemes.
The BPG provides for four types of company pension benefits:
- Pension fund commitments in relation to domestic or foreign pension funds
- Collective company pension insurance schemes
- Direct pension commitments
- Life insurance plans.
What these pension commitments have in common is that they provide a supplement to old age pensions, disability/invalidity pensions and survivors’ pensions from statutory pension insurance.
VOLUNTARY PRIVATE PENSION
Various insurance companies and banks offer a range of private pension products. Consumers decide themselves whether this constitutes a necessary and meaningful in addition to their state pension.
3. Health Insurance
Almost the entire resident population of Austria (99.9 percent) is covered by statutory health insurance. Statutory health insurance offers the insured and their co-insured family members comprehensive protection in the case of illness.
In accordance with the law, the provision of medical treatment has to be sufficient and appropriate, but may not exceed that which is necessary.
The legal right to services includes – independently of the amount of health insurance contributions paid – a right to benefits in kind for the medical services required in the specific case. These can be provided by contracted doctors in the facilities of the social insurance institutions or in contracted facilities (hospitals). All of the insured and those entitled to services have the same level of entitlement.
Services are mostly provided without additional costs for the insured, although for some groups of insured persons contributions to costs (co-payments) have to be made.
MEMBERSHIP OF OCCUPATIONAL GROUPS
Austrian social insurance is organised according to membership of occupational groups. This means that people belong to a certain social insurance institution because of the work they do.
Since 1 January 2020 (structural reform of the social insurance system), the following applie
- Those employees who were previously insured with the regional health insurance funds are now insured with the Austrian Health Insurance Fund (ÖGK). Pensioners who were previously insured with the regional health insurance funds as well as all those persons who were insured with a company health insurance fund are now also with the ÖGK.
- Those persons who were previously insured with the Insurance Institution for Railways and Mining as well as those civil servants and contracted public-sector employees whose employment relationships began after 31 December 2000 (unless they belong to a special health insurance scheme at a provincial level) now belong to the new Social Insurance Institution for Public-Sector Employees, Railways and Mining (BVAEB).
- Those businesspeople and freelancers previously insured with the Social Insurance Institution for Businesses (SVA) are now in the Social Insurance Institution for the Self-Employed
CO-INSURANCE AND SELF-INSURANCE
Statutory health insurance also protects the family members of the insured, either without additional contributions or for a reduced contribution.
Non-insured persons have the opportunity to apply to insure themselves on a voluntary basis.
4. Accident Insurance
Statutory work accident insurance offers protection against the occurrence of and the consequences of accidents at work and occupational diseases. In 2019, a total of around 6.5 million persons (73 percent) were covered by statutory accident insurance in Austria.
From a historical perspective, accident insurance can be viewed as superseding employer’s liability, and is thus a form of liability insurance taken out by employers for their employees. This also explains why, in the case of employees, it is only their employers who pay contributions, and why statutory accident insurance only covers those accidents and diseases which are directly linked to their employment.
The self-employed pay their contributions themselves. Pupils and students as well as members of aid organisations and rescuers are also covered by accident insurance, but without having to pay their own contributions.
Statutory accident insurance is thus not responsible for providing benefits for accidents which take place in a person’s private life. However, in such cases, those affected do receive benefits and services from statutory health and pension insurance.
THE SOCIAL ACCIDENT INSURANCE INSTITUTIONS
The General Accident Insurance Institution (AUVA) is responsible for accident insurance for blue-collar and salaried employees as well as pupils and students.
Self-employed businesspersons and self-employed farmers and foresters and their family members who work with them are insured with the Social Insurance Institution of the Self-Employed (SVS).
Civil servants and contracted public-sector employees of the federal government, the provinces and local authorities (unless they belong to an accident institution established at a provincial level) as well as civil servants of the Austrian Federal Railways, railway workers in general and employees of Vienna Transport are insured with the Insurance Institution of Public-Sector Workers, Railways and Mining (BVAEB).
BENEFITS AND SERVICES FROM STATUTORY ACCIDENT INSURANCE
The accident insurance system carries out preventive work in the following fields:
- the prevention of work accidents and occupational diseases;
- first aid in cases of work accidents and occupational diseases;
- medical treatment in the case of accidents;
- the rehabilitation of disabled persons;
- compensation after work accidents and occupational diseases;
the payment of pensions; - subsidies for continued pay;
- research on the most effective methods and means of fulfilling these tasks, and
the fulfilment of other tasks in the field of the occupational medical care of the insured.
BENEFITS FROM STATUTORY ACCIDENT INSURANCE IN 2019
In 2019, 177,000 insured events were recognised (of which 55,000 were accidents involving pupils and students). The insured events can be subdivided into 160,000 work accidents in a narrower sense, around 16,000 accidents which occurred on the way to or from work or school/university, and 1,400 cases of occupational diseases.
As at December 2019, around 93,000 pensions were being paid. Of these, around 80,000 were for invalidity pensions and around 13,000 for pensions for surviving dependants.
5. Social Issues
Austria pursues a comprehensive social policy, which is based on a wide-ranging and dense network of social benefits and services.
The objective of Austrian social policy is to counteract risks such as poverty, violence or social exclusion. To this end, alongside support systems such as social insurance, there is a range of other priorities, which include:
- an active senior citizens’ policy
- measures to prevent violence;
- support for voluntary work;
- the promotion of social corporate responsibility, and
- activities to reduce social inequalities, such as benefits for families,
- social compensation and
- new social projects (such as the social impact bond).
NATIONAL AND REGIONAL RESPONSIBILITIES
The Austrian system of social security is divided up between the federal government, the provinces and local authorities. Benefits under social insurance law and general benefits are the responsibility of the federal government, while the provinces, local authorities, and cities and town are responsible for a major part of the health care system, housing, social services, childcare facilities and the means-tested minimum income.
SOCIAL LEGISLATION: COOPERATION WITH THE SOCIAL PARTNERS
Numerous non-state parties are involved in the creation of social legislation in Austria and play a key role in the process of the formation of political opinions and policies. The most important of these include the Chamber of Labour (AK), the Economic Chamber (WKO) and the Chamber of Agriculture (LK), the Federation of Austrian Trade Unions (ÖGB) and the Federation of Austrian Industries (IV).
Finally yet importantly, the institutions of the European Union provide important impulses for the further development of the social welfare system.
Before national measures in the field of social legislation are taken, the social partners are consulted. The latter endeavour to find consensual solutions, which are frequently a good basis for legislation.
(Source: Federal Ministry of Social Affairs, Health, Care and and Consumer Protection, 2021)
https://www.austria.org/the-welfare-state