Aliquoting – yes or no?

MB – 04/2023

In Austria, the pension adjustment – improved pension adjustment as it is called there – is being discussed at the political level. To be precise, it is about aliquoting.

Aliquoting – what is it?

The term is not a common expression for German readers, so by way of introduction we will briefly explain what is meant by it in Austria. Aliquoting is defined in terms of business administration as the pro rata calculation of entitlements of persons for a given accounting period. With regard to the Austrian pension insurance, this means that persons entitled to a pension whose pension commencement date was in the previous year of the pension adjustment shall in principle only receive a first pro rata adjusted pension. This is regulated accordingly in Section 108h para. 1a General Social Insurance Act (ASVG): Persons whose pension commencement data was in the previous year will only receive a specific adjusted amount (90 to 10 per cent) for the pension adjustment on 1. January of the following year if their pension commenced between February and November. If the pension commences in November or December, there will be no adjustment on 1 January of the following year, but the first increase will only take place with the second following calendar year. 

Inflation compensation or adjustment according to law

In times of sharp price rise and high inflation, this is naturally the subject of political debate. The governing coalition of the Austrian People's Party (ÖVP) and the Greens therefore wanted to initiate a temporary suspension of aliquoting, after it had already been mitigated for 2023. In principle, the adjustment value for Austrian pensions as of 1. January 2023 was 5.8 per cent. However, the Pension Adjustment Act also stipulates that the minimum adjustment for all pensioners will be 2.9 per cent.

In the Social Affairs Committee of the Austrian Parliament – the National Council – no agreement could be reached on 23. March due to the conflicting views of the political parties. While the ÖVP/Greens favour a temporary suspension, the Social Democratic Party of Austria (SPÖ) calls for a complete abolition, while the Freedom Party of Austria (FPÖ) demands an extraordinary pension adjustment and "full inflation protection" by motion. The NEOS – the Austrian liberals, in contrast, demand the reintroduction of a one-year waiting period for the first pension adjustment. Against this background, all motions were adjourned.

Austria and Germany in comparison

There is no discussion in Germany that is comparable to that in Austria; in Germany, all pensions – irrespective of the pension commencement date – will be adjusted on 1 July 2023 at 4.39 per cent in the old federal states and 5.86 per cent in the new federal states.