Informal Workshop on public pensions sustainability and disability pensions procedures and reforms

19 December 2011, 10-12:30, CC18

The sustainability and adequacy of pensions are major topics for the design and development of pension systems. This workshop deals with two major aspects in this broader context.

The workshop will start with a discussion of a simulation tool, developed by the Austrian Chamber of Labour, looking at the links between labour force participation, replacement and contribution ratio and the financing gap, depending on the effective pension age.

It will then discuss Invalidity pension procedures and developments which are of great concerns in many member countries. In particular psychiatric diseases are increasingly responsible for labour market dropouts. It is important to understand the applied formal procedures and the expertise which is used in a disability case in order to be able to design policies in a way to prevent disability. The workshop will discuss procedures and suggestions developed in Austria. 

Programme:

Short summary of the presentations and discussion:

Two colleagues from the Austrian Chamber of Labour (Josef Wöss and Erik Türk) presented a simulation tool to visualise the importance of labour market performance for the economic dependency ratio. The demographic component is the single most important driving force, but the employment share, other benefit entitlements and the replacement rate can provide an effective relief if appropriate policies are brought into place. While this is nothing revolutionary new it nevertheless strengthens the need for good and comparable data (Eurostat labour survey data, as used in the Commission Ageing Reports, for instance does not differentiate between mini-jobs and full time employment). Monika Queisser from ELS mentioned that they are preparing a benefit data base. The simulation tool could be used to quantify various labour market and retirement reforms, also in terms of fiscal impact. The team is open for co-operation both on cross country projects as well as individual surveys (they cover the EU27 and some – but not all – OECD member countries). Their political conclusions are to broaden the policy response on the demographic challenge and consider also employment enhancing education and labour market policy. Achievement of the EU2020 targets would for instance result in a stabilisation of the economic dependency ratio.

Patricia Wolf from the Vienna Court for Social and Labour market affairs described the Austrian way into disability benefits, which is modelled after a court case in which the disability has to be proven with the help of medical experts. She also presented statistical information showing the increase of mental health problems for disability, especially for women. For men disability because of mental health problems mainly increased for age groups which usually would go into early retirement because of a partial loss of work capacity (manifesting itself in long term unemployment). She also pointed to some other peculiarities of the Austrian system, like the missing enforcement (because of missing availability) of proper treatment of mental health cases (an issue which was also raised by Richard Layard in his key note speech at the IZA/OECD workshop a month ago).

The two colleagues from the Austrian Chamber of Labour reported about a social partner summit (attended by Monika Queisser) which agreed on a set of measures improving incentives for better workplaces and greater responsibility of employers, however stricter gatekeeping and removing institutional firewalls remain unaddressed. Eva Belabed (Social counsellor, Austrian delegation) questioned OECD recommendations for achieving higher employment as too much relying on an old model, stressing labour costs and competition. Reforms of the disability scheme suggested by the social partners include a strong focus on early intervention to avoid the granting of a disability benefit, thereby hopefully contributing to an increase in the effective age at retirement (estimated at 1.5 years over the next ten years). Christopher Prinz (ELS, author of OECD’s recently published Mental Health and Work report) characterised the Austrian trends with regard to disability as a process of “normalisation”: while the Austrian disability system excludes people without a minimum work record, the increase in claims by women, people under age 50 and because of mental illness means Austria is catching up with developments in other OECD countries and moving away from disability functioning as yet another early retirement scheme. A peculiarity in the Austrian scheme is the role of professional protection, which tends to benefit the better off.

In summing up, Andreas Wörgötter pointed out that increasing retirement age will not automatically lead to higher employment and sustainable pension systems unless policies are in place, which better prevent work related health deterioration, and to the extent productivity declines, help employers to keep workers in employment. The success of such recommendations will crucially depend on further good co-operation between ECO and ELS as well as delegates and practitioners in the field.

Presentations and background papers:

• Dependency ratios and demographic change. The labour market as a key element (Josef Wöss and Erik Türk)
• Disability pensions. Bad Ischler accord of social partners (Josef Wöss, AK Wien)
• The Impact of labour markets on economic dependency ratios - Presentation of dependency ratio calculator (Dr. Josef Wöss)
• Dependency ratio calculator. Simulation tool for the interaction between demography, pensions and the labour market (Josef Wöss/Erick Türk, AK Wien)
• The Austrian way into invalidity pension (Patricia Wolf)