Simulation of Pension System Changes on the Amount of Old-age Income and the Gender Pension Gap in Austria

Against the background of persistently high gender pension gaps, this study simulates the effects of, first, the revaluation of child-rearing periods and unemployment, second, the introduction of a gender pay gap factor, and third, the switch from 45 to the best 15 years of earnings on individual pension amounts, the gender pension gap and pension expenditure. The revaluation of child-rearing-periods would increase women's pensions by about 9 percent on average, and the revaluation of unemployment by between 2 and 5 percent, depending on the magnitude of the effect. Taking into account a simulated gender pay gap factor would reduce the gender pension gap by up to 27 percent, depending on the form of implementation. The impact on the income and poverty risk of affected households is also estimated. Higher individual pensions also reduce the at-risk-of-poverty rate of affected households by up to 7 percent, and a higher minimum threshold for means-tested pensions ("Ausgleichszulage") would even reduce the at-risk-of-poverty rate of single pensioners to 2 percent.