So much more pension if you work a year longer

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Depending on your profession and earned income, you can expect your first pension to increase by 100 to 200 euros if you work one year longer.

This is the conclusion of a study conducted by the Economic Research Institute on behalf of the association Aktion Generationengerechtigkeit, which was presented on Monday. The values for the pension refer to the corridor pension to be started between 62 and 68 and are calculated on an earned income from 2019.

100 to 200 euros more pension per month, with one year more work
The Wifo study examines the impact of different retirement dates within the corridor pension on the amount of the individual’s first pension and lifetime income for some model careers, both genders, and seven occupational groups. Furthermore, the consequences of later retirement for the public budget are calculated. In contrast to the standard retirement age of 65 (for men), the corridor pension offers the possibility of retirement between 62 and 68 with deductions or supplements.

This is how much more pension people with low incomes get
For occupational groups with low earned income and a flat lifetime earnings pattern (sales, personal services, skilled trades, machine and plant operators, and especially unskilled workers), an additional year of employment increases the net initial pension by about 120 euros per month (14 times annually at 2019 prices and wages). In occupational groups with a medium income level and a slightly increasing income with age (office workers), an additional year of employment increases the net initial pension by around 150 euros per month (14 times annually). In occupational groups with a higher income level and a higher increase in income with age (technical specialists, academic professions), an additional year of employment increases the net initial pension by around 180 euros per month (women) and 200 euros per month (men).

The effect on the amount of the first pension tends to be higher for men
For men, the impact on the initial pension amount tends to be higher because they receive a higher earned income on average. The deduction of payroll taxes and social security contributions strongly mitigates the differences between men and women.

Increase in income due to pension amounts to 1.5 to 3.2 percent
The net increase in lifetime earnings from retiring at age 63 compared with retiring at age 62 is between 1.5 and 3.2 percent. Taking full advantage of the corridor until age 68 allows for an increase in lifetime earnings of 7.5 and 17.5 percent compared with retirement at age 62. In both model careers (with and without children), women benefit more from extended employment than men because they have a higher life expectancy. Therefore the pension drawdown period is longer.

Later Retirement Improves the Government’s Financing Balance
The net lending/borrowing of the general government improves with later retirement in all case studies. Converted to 2019, the surplus per person oscillates between one-tenth and 5.5 times the average annual salary of non-self-employed persons in 2019. The length of additional employment and the occupational group to which the person belongs are the most important influencing factors.

Minor impact on government budget for later retirement of women
Retiring one year later for women in the machine and equipment operators and support workers occupational groups has the most negligible impact on the government budget. The most significant impact on the government budget occurs when male academics and technical specialists or female academics do not retire until they reach the age of 68. In this case, the surplus is 3.5 to 5.5 times larger than the average annual salary of unskilled workers in 2019.

  • sources: APA/vienna.at/pciture:
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