Railway pensions reform agreed

Partly through legal reform and partly through a works agreement, a pensions reform was achieved at the Austrian Federal Railways in December 1997, concluding the Government's year-long efforts. The pensions of railway employees with civil servant status will in future closely resemble those in the rest of the public service, although the right to retire at the age of 53 has been retained.

On 9 December 1997 the pension reform for those employees of the Austrian Federal Railways (Österreichische Bundesbahnen, ÖBB) with civil servant status was concluded. This was the final part of the pensions reform the Government had set out to achieve at the beginning of 1007 (AT9711144F). Because ÖBB pensions are not regulated by law or by collective agreement but by individual employment contracts, the reform posed serious problems. It was finally achieved by way of a delicate balance between legal reform and works agreement. This was accompanied by serious tensions within the coalition Government.

The reform is steeped in copious detail. The most important elements are as follows:

  • railway employees retain the right to be retire on a pension after 35 years of employment, ie from the age of 53;
  • after 2003, pension entitlements will no longer be based on final salary. Instead, a system calculated on the average of the employee's 18 best years of earnings will gradually be introduced between 2003 and 2020, though if employees remain at work until the age of 65, only the best 15 years will be averaged. A maximum of 80% of the average earnings will be paid as the gross pension;
  • while averaging is being introduced, the pension losses from it will be capped at 1% for those on an average gross income of ATS 10,000 per month, growing to 7% for ATS 28,000. Above this amount there is no capping;
  • employees retiring after 2019 will have their pension insurance contributions reduced by 1.5 percentage points from the year 2000;
  • as an incentive for later retirement, the "pension support contribution" which railway employees must pay over and above the regular pension insurance contribution, and which railway pensioners also have to pay, is to be lowered by 0.2 percentage points for every year they remain active after the age of 53, up to a maximum of 1.4 points;
  • at the same time, the pension support contribution will be raised by one percentage point between 1999 and 2000, ie from the current 3% to 4% (for gross incomes below ATS 39,000 per month). The pension insurance contribution stays fixed at 10.25%; and
  • for pensioners under the age of 65, pensions will be cut accordingly if additional gross income exceeds ATS 3,740 per month and the pension together with the extra income adds up to more than ATS 12,000 per month.

Most of these provisions are closely modeled on civil service pension entitlements. None of them apply to ÖBB employees hired since 1995, who do not have civil servant status.

Between 2000 and 2002, unemployment insurance contributions will gradually be introduced for all ÖBB employees (who were formerly exempt). From 1 January 2002, these contributions will be 3% of gross income (AT9709132N).

Further, railway salaries will rise by 1.7% from 1 January 1998 and by another 0.4% of December 1997 salaries on 1 July 1998. This, too, is parallel to civil service salaries.

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