Public Costs of Private and Occupational Pensions

In 2015 Austrian firms and private households paid 8.6 billion € into occupational and private pension schemes. Subsidies for occupational and private pensions vary across schemes. The burden for public budgets from direct subsidies was 42 million € in 2015. Indirect costs resulting from the beneficial treatment of social security contributions and income taxes were at 1.6 billion € if compared to a reference taxation of saving accounts. If compared to the treatment of voluntary contributions into the public pension system (for covering years of school attendance) indirect revenues of 520 million € emerge, because contributions and taxes associated with private life insurance would be inapplicable. Considering the whole life time of pension schemes, the lump sum payments out of occupational life insurance according to § 3 Abs. 15 EStG and annuities from "Betriebliche Vorsorgekassen" create the highest indirect costs. Low indirect costs, on the other hand, are associated with employee contributions to pension funds (without public premium) and annuities from private life insurance.