European Disability Pension Policies

11 Country Trends 1970–2002

Christopher Prinz

• Publisher: Routledge
• Year: 2018
• Print ISBN:
  9781138726581
• eBook ISBN:
  9781351751704
• Topic: Social Sciences
• Subtopic: Social Work
• Index: Social Sciences

This title was first published in 2003. During the last twenty years, the longer-term sustainability of social insurance systems has become a major issue in all European countries. Analysts and governments are increasingly alarmed at the growth in the number of disability benefit recipients, and the expansion of disability benefit schemes via increasing benefits, broadening coverage and easing access. While policy measures differ widely, policy goals tend to converge. This book analyses and compares the often controversial disability benefit policies in eleven European countries, examining their rationale, impact and outcome, and the direction of reform in the future. It will make fundamental reading for specialists in disability, social protection and public economics, and for Social Policy academics, researchers and students generally.

Part B:
Country Trends

Chapter 3
Disability Pensions in Austria

Karl Wörister

1 Survey of the Austrian pension system

In the Austrian social security system, provision for persons with permanently reduced earning capacity is an essential task of the pension system. The public system consists of two parts, pension insurance and civil service pensions.

At present, 87% of public pensions come under the pension insurance scheme. The remaining pensions come from various civil service pension schemes (including federal and provincial officials, railways and post of-fice). As very little information is available about civil service pensions, they will only be dealt with in passing. The following contribution is restricted mainly to pension insurance.

Persons covered

With the exception of public officials, practically all persons earning an income have pension insurance.¹ Some low-income jobs are exempt from pension contributions (monthly income of less than EUR 296 in 2001). Since January 1998 it has been possible to 'opt in' and make voluntary contributions. At present around two-thirds of low-income earners are covered by pension insurance.

Non-earners can also make voluntary contributions, but this option is little used (currently less than 0.5% of the insured).

Organization

There are seven pension insurance institutions, classified by professional group (blue-collar workers, white-collar workers, tradesmen, farmers, nontenured railway workers, miners and notaries). They are all members of an umbrella organization (Hauptverband der österreichischen Sozialversicherungsträger), to which health and accident insurers (work accidents, vocational illnesses) also belong.

These groups are covered by five federal laws. Except for the small group of notaries, the provisions are the same for all. The differences are in the regulations governing contributions and the definition of disability, which is adapted to the particular situation in each of the groups.

The central law covering social insurance for the non-self-employed (health, accident and pension insurance) is the General Social Insurance Act (ASVG), established in 1955.

Types of pensions

Apart from disability pensions, the Austrian pension system has two other types of early pension as well as a sliding pension. While the regular pensionable age since the ASVG entered into force has been 65 for men and 60 for women, applicants could, until September 2000, take early retirement five years earlier (women 55, men 60). By the end of 2002 these age limits will be gradually raised by 1.5 years. They also apply to sliding pensions.

The various types of pensions are described below.

1. Normal old-age pension (regular retirement age). Prerequisite for this pension is normally 15 years of contributions.² In fact, this pension is not 'normal' since in 2000, for example, only 20% of new pensions were of this type (women 34%, men 9%).

The lower retirement age for women (60) is due to be raised to that of men (65) between 2024 and 2032.³

2. Early retirement for long-term contributors was possible until 1996 if the applicant had 35 years of contributions and had not yet reached the corresponding age limit (55/60). By the year 2000 this minimum period had been raised to 37.5 years. In that year, 37% of new pensions were of this type (men 40%, women 33%).
3. Early retirement because of unemployment can be applied for after one year's unemployment, if the applicant has 20 years of contributions;⁴until 1996 15 years was sufficient. Five per cent of new pensions were of this type in 2000 (women 8%, men 2%).
4. It has been possible since 1993 to apply for a sliding pension. The same age limits as for early retirement apply. This sliding pension is barely used, however (2000: 0.3% of new pensions). It is intended for white-collar workers, who account for 90% of the claimants.

Between 1993 and 2000 there was also early retirement on account of reduced work capacity. This pension corresponded to a special ruling within the disability pension scheme for persons over 55 who were restricted in their ability to work. In 1996 the age limit for men was raised to 57. In May the European Court of Justice abolished the different age limits for men and women. The Government took this decision as an opportunity to do away with this pension at once as part of its consolidation policy. (This aspect is discussed in greater detail in the next section.)

The following section considers first of all the individual legal provisions. It is followed by a description of legal developments, especially since 1980. Then there will be a discussion of the court decisions defining the criteria for distinguishing between disability and non-disability. The final section will look at the results of studies that have been carried out.

2 Survey of legal provisions

Unlike most legal provisions in social insurance, the term disability is defined differently for the different professional groups. Among non-self- employed persons alone there are three different groups (blue-collar workers, white-collar workers and miners). Public officials have their own regulations and among the self-employed there are different provisions for farmers and tradesmen.

A distinction is made in the legal provisions between

• the term 'disability' and its definition,
• the qualifying period (= minimum period of contributions) required for a pension,
• special regulations for calculating the pension, and
• provisions for short-term disability pensions.

The following section does not deal with the concept of disability, which will be discussed in detail in the final section.

2.1 Entitlement to disability pension

The required length of contributions depends above all on the age of the

person concerned. For young invalids the period of contributions is lower

than it is for older persons:

• Persons who are disabled before the age of 27 require only six months of contributions.
• Up to the age of 50, five years (60 months) of contributions are required and must have been made within the previous 10 years.
• For persons aged 50 to 60, the contribution period is 15 years (disability after the age of 60). For example, a person aged 54 who applies for a disability pension must have nine years of contributions over an 18- year period (between the age of 36 and 54).⁵
• Persons who have 15 years of contributions (i.e. without replacement periods) at the time of disability, satisfy the conditions irrespective of their age.
• Special provisions applied for early retirement on account of reduced workcapacity (1993-2000). Until 1996, ten years of contributions were required, the requirement being raised thereafter to 15 years.
• If the disability was the result of a work accident or recognized vocational disease, no specific amount of contributions is required.
• Before 1985, the entitlement provisions were even more generous.

2.2 Calculation of pension

The amount of the disability pension is calculated like the old-age pension and therefore depends on the number of years of contributions and the income in the calculation period.

For young disabled persons, however, there is a special ruling. Until 30 June 1993, the following supplement applied: if the disability pension became due before the claimant had attained the age of 50, the incremental amount,⁶ based on the number of years of contribution, was increased to a maximum of 50%, the increment for each year up to the age of 50 being 1.9%.

Following the pension reform in 1993, both the maximum incremental amount and the age limit were raised and an additional limit included. The provisions of the reform were as follows:

• Periods without contributions up to the age of 56 are taken into account.
• The maximum resulting incremental amount is 60%.

The assessment base has been modified several times since (1996,1997 and 2000). The current ruling is as follows:

• For old-age and disability pensions, the pension amount increases by 2% of the assessment base (average income for the 15 'best' years of contribution) for every year of contribution.⁷
• If a pension becomes due before the claimant reaches pensionable age (60 for women, 65 for men), the incremental amount is decreased by 3% per year of contributions.⁸ The maximum amount that can be deducted is 10.5% or 15% of the original incremental amount.⁹
• If disability occurs before the claimant is 56.5 years old, the missing contribution periods until then are taken into account provided that the total incremental amount is not more than 60% (after allowance for the deduction). Transitional rulings apply until 2004.
• The pension calculated in this way remains unchanged even after the claimant reaches the regular pensionable age.
• The pension system guarantees a minimum income, with further income being taken into account. The amount in 2001 is EUR 613 per month for single persons and EUR 875 for married couples.
• Pensions in Austria are paid out 14 times a year.

As a result of the rules in force, a claimant receiving a disability pension can expect to receive less than an old-age pensioner. This is confirmed by data from the Hauptverband and the Federal Ministry of Labour and Social Security.

Table 1: Net pension in per cent of most recent net income (new claimants 1998, non-self-employed) (averages):

In 1999 the average new disability pension (median) for previously non-self-employed men was EUR 948 per month (gross) and hence 38% lower than the corresponding old-age pension (EUR 1,536). For women the new mean disability pension was EUR 570,22% lower than the mean old-age pension (EUR 733).

This calculation method could well discriminate against disabled persons.¹⁰ It should also be borne in mind that persons who were disabled when young had no possibility of earning income, a fact that is reflected in the assessment base and hence in the pension itself.

2.3 Time limit for disability pensions

Since 1996, disability pensions have been limited by law to a maximum of 24 months, unless “permanent disability is to be assumed on account of the physical or mental state”. If the disability continues, the pension is paid if an application for continued payment is made within three months. In 1999, 77% of the new disability pensions granted by the pension insurance scheme were time-limited.

Apart from pensions granted with a time limit from the outset, permanent disability pensions can be revoked if the conditions are no longer satisfied. If the pension is revoked because the recipient has recovered his/her mental or physical capacities, the pension is stopped at the end of the month in which the decision is served. According to the court interpretation, a ‘significant’ improvement must have taken place (Teschner/Widlar, 1974:580f.). In 1999,400 disability pensions were revoked by the pension insurance funds (social law statistics of the Hauptverband der österreichischen Sozialversicherungsträger).

2.4 Legal recourse

As with all other decisions by social insurance funds, refusals and revocations can be contested by the person concerned. An objection can be filed with the competent labour or social court within three months of service of the decision. This suspends the decision (or that part of it that is objected to).¹¹ Further instances are the Oberlandesgericht (appeal) and Oberstes Gerichtshof (appeal on points of law).

In 1999, the pension insurance funds recognized 16,000 disability pension claims and rejected 24,000. This means that four out of ten applications were accepted. As in previous years, one in two of the rejections was taken to the next instance (social court), but only one in four appellants was successful.

The situation was a little easier for persons who had applied for an early retirement pension on account of reduced work capacity, where three-quarters of the applications were accepted (14,400 compared with 4,500 rejections). Those who took their case to the social court were also more successful (six out of ten).¹²

3 Development of legal regulations

There were two reforms in the early 1960s that had an important effect on the development of disability pensions:

• The introduction of early retirement pension for long-term contributors in 1961 was designed as a remedy to the large number of disability pensions (particularly among blue-collar workers). Persons who had 35 years of contributions and were still in employment could retire five years before the regular retirement age (60 for women, 65 for men).¹³ Although there was no change in the legal provisions for disability pensions, this decision was based on the gross assumption that a long working life would inevitably have a wearing effect on the health.¹⁴
• In 1962 'job protection' was introduced for skilled (and semi-skilled) workers, which meant that they could no longer be assigned to unskilled work. This decision brought the regulations for blue-collar workers into line with a similar disability pension provision for white-collar workers.

Work protection for older workers from 1981

The next significant change in the law came in 1980 (effective from 1981) for persons over the age of 55. This reform also created a type of protection for unskilled workers who had been doing the same or similar work for 15 years. If the health requirements were fu...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures and Tables
• Preface: Recent European Centre Disability Welfare Studies and the OECD Report 2003
• PART A: INTRODUCTION AND THEORETICAL OVERVIEW
• PART B: COUNTRY TRENDS
• List of Contributors