Equal Pension Day: Equal rights through pension splitting

Compared to the previous year there was a minimal improvement - but the result was "more than sobering", writes our guest author, attorney Carmen Thornton.

On July 29, 2019, pensioners in Austria had little reason to celebrate. This year the so-called Equal Pension Day fell on this date, i.e. the day on which men had already received as much pension as women by the end of the year. Compared to the previous year, this is a minimal improvement of one day, but the result is still more than sobering.

On average, women's pensions are more than 40% below those of men. This is mainly due to the fact that women take parental leave more often and longer because of childcare and then work part-time much more often than men. As a result, women have an average of 10 fewer contribution years than men when they retire and therefore, in addition to the loss of income during employment, also have to make financial cuts in their retirement. Women therefore slide particularly often into old-age poverty.

Voluntary pension splitting

One way of ensuring a little more fairness in pensions is voluntary pension splitting. After the birth of the child, the working parent can have up to 50% of their pension credit transferred to their partner, who is dedicated to raising children. This gives him (in addition to the automatic crediting of the child-rearing periods) a credit on his pension account. The parents do not have to be married or live in a common household. The pension splitting is possible for the first 7 years of the child's life (with several children for a total of 14 years) and can also be applied for afterwards up to the 10th birthday of the youngest child.

Pension splitting is only possible, however, if one of the parents does not go to work at all or is only marginally employed. If a partner works part-time in addition to childcare and exceeds the marginal earnings limit, they cannot have pension credits transferred. Women who work part-time in addition to childcare thus end up in the part-time trap again.

No automatic crediting of the contributions

Another problem is that in Austria (in contrast to other countries) there is no automatic crediting of contributions. Both parents must therefore make an appropriate agreement and submit an application to social security. In practice, this proves to be quite a stumbling block. It would therefore make sense if the parents' contributions for the periods of childcare were automatically divided between the pension accounts of both parents. Unfortunately, there is currently no change in the legal situation in sight.

Women, who are mainly responsible for looking after the children, should nevertheless not have any reservations about discussing this topic with their partner. If one parent does most of the unpaid work, it is only fair if the parents at least share the retirement periods fairly. And most men will likely feel it that way too.

Fair distribution of unpaid work

Even if pension splitting in itself is a good thing: In order to really close the pension gap, a fair distribution of unpaid family work and paid employment would be necessary. Above all, this requires comprehensive and nationwide childcare that is compatible with full-time employment, i.e. all-day opening times of kindergartens (including during school holidays) and free afternoon care in schools.