Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Age Reallocation through Public Transfers in Austria Bernhard Hammer
May 12, 2011
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Outline Motivation and Overview The Role of Public Transfers in Age-Reallocation Composition of Public Transfer In- and Outflows Transfers-Categories in Detail Education Health Family and Children Unemployment Pensions Projections Evaluating Sustainability Evaluating Fairness Conclusions and Outlook Questions
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
The Role of Public Transfers in Age-Reallocation Composition of Public Transfer In- and Outflows
Age-Reallocation: Overview
Figure: Age Reallocations 2005
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
The Role of Public Transfers in Age-Reallocation Composition of Public Transfer In- and Outflows
Public Transfer Inflows 2005 Table: Public Transfer Inflows 2005 Category Total Public Transfers Transfers In Kind Education Health Other Transfers in Cash Education Health Old Age Survivor Disability and Sickness Family and Children Unemployment Social Protection, Other Other, Other Current Transfers
Amount in Mill. Euros 93,943.33 45,135.60 12,389.80 12,727.70 20,018.10 48,807.73 212.31 662.44 25,388.94 5,067.65 4,530.68 4,654.61 3,158.95 289.39 4,842.77
Percent of Total 100.0 48.0 13.2 13.5 21.3 52.0 0.2 0.7 27.0 5.4 4.8 5.0 3.4 0.3 5.2
Percent of GDP 38.6 18.5 5.1 5.2 8.2 20.0 0.1 0.3 10.4 2.1 1.9 1.9 1.3 0.1 2.0
I rules to classify transfers into NTA-categories? (ESSPROS) I age-distribution of in-kind transfers in the category ”Social Protection”? Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
The Role of Public Transfers in Age-Reallocation Composition of Public Transfer In- and Outflows
Public Transfer Inflows 1995 - 2005 Table: Comparison 1995 - 2005 Category Total in % of GDP Share YA/YL In-kind Education Health Other Cash Education Health Old Age Survivor Disability and Sickness Unemployment Family and Children Social Protection, Other Other Current Transfers Other
Bernhard Hammer
2005 38.6 0.28 48.0 13.2 13.5 21.3 52.0 0.2 0.7 27.0 5.4 4.8 3.4 5.0 0.3 3.7 1.4
2000 39.0 0.23 49.0 13.7 12.7 22.7 51.0 0.2 0.8 25.6 5.9 5.5 2.6 4.2 0.3 3.1 2.8
1995 41.7 0.20 49.1 13.3 13.3 22.5 50.9 0.2 0.8 23.5 6.1 5.4 3.2 4.3 0.1 4.3 3.0
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
The Role of Public Transfers in Age-Reallocation Composition of Public Transfer In- and Outflows
Public Transfer Outflows - Taxes
Table: Public Transfers: Outflows Outflows Taxes on Income Profits and Capital Gains Taxes on Payroll and Workforce Taxes on Property Taxes on Goods and Services Taxes on International Trade and Transactions Other Taxes Other current Transfers Social Contributions Total Outflows (Earmarked and EU-Taxes)
Bernhard Hammer
Amount in Mill. Euros 9,642 21,514 607 24,220 327 1,593 2,708 39,215 99,827 6,365
Share of Total 9.7 21.6 0.6 24.3 0.3 1.6 2.7 39.3 100.0 6.4
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Education Public Education is financed out of general taxes
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Health – Institutions
Table: Public Health Consumption Institution Health Insurance Federal States (Bundesl¨ ander) Communities General Government Pension Insurance
Share 46.4 43.3 5.2 1.7 3.3
Services Outpatient Services, Medicaments Stationary Services Stationary Services Stationary Services Preventive Care, Rehabilitation
Bernhard Hammer
Funding Source Contributions General Taxes General Taxes General Taxes Contributions, General Taxes
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Health – Age-Distribution
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Family and Children – Institutions Table: Family and Children - Inflows Institution Family Burdens Equalization Fund Health Insurance Family Allowance (Public) Federal States
Amount 4,043.05 347.92 198.58 65.05
Share of Total 86.9 7.5 4.3 1.4
Benefit Family Allowances, Child Benefits Maternity Allowance Family Allowance, Child Benefits Family and Child Allowances, Means Tested
Table: Family and Children - Outflows Institution Family Burdens Equalization Fund Health Insurance Family Allowance (Public) Federal States
Bernhard Hammer
Funding Payroll Tax (85%), General Taxes (15%) Contributions (Payroll) Imputed Contributions Employer General Taxes
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Family and Children – Age-Distribution
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Unemployment Funding: Contributions (92%), General Budget (8%)
I The peak before retirement includes pensions due to unemployment and a
so called ”Vorruhestandsgeld” (paid leave before retirement) Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Pensions Table: Social Protection: Old Age Transfer-Type Old Age Pension Invalidity Pensions (≥ 60/65) Compensation Allowances Early Retirement Pensions Public Pensions (≥ 60)
Amount 12,239 2,202 353 2,202 6,667
Share in % 48.2 8.7 1.4 8.7 26.3
1,453 273 25,389
5.7 1.1 100.0
Care Benefits Other Total
Institution Pension Insurance
General Government
General Government Miscellaneaous
Funding Contributions (73.7%) General Taxes (26.3%)
General Taxes (28%) Contributions (25% real, 47% imputed) General Taxes General Taxes
Table: Social Protection: Disability and Sickness Transfer-Type Invalidity Pensions (≤ 60/65) Public Pensions (≤ 60) Care Benefits Other Total
Amount 2,959.56 1,179.79 378.78 12.55 4,530.68
Bernhard Hammer
Share in % 65.3 26.0 8.4 0.3 100.0
Institution Pension Insurance General Government General Government, Federal States General Government
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Pensions
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Pensions: Old Age
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Pensions: Survivor
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Education Health Family and Children Unemployment Pensions
Pensions: Disability and Sickness
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Evaluating Sustainability Evaluating Fairness
Population
Figure: Age Reallocations 2005
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Evaluating Sustainability Evaluating Fairness
Projections – Dependency-Ratios
Figure: Projections - Dependency-Ratios
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Evaluating Sustainability Evaluating Fairness
Projections – Pensions
Figure: Projctions Pension In- and Outflow – Ratio
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Evaluating Sustainability Evaluating Fairness
Projections – Transfers
Figure: Projections of the In- Outflow – Ratio
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Evaluating Sustainability Evaluating Fairness
Evaluating Fairness I
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Generational Fairness: The contributions of a cohort should equal its benefits Example: Follow 1945 cohort and estimate contribution and benefits using 2005 age-profiles I I I I
106,000 persons (+Migration) labor market entrance from 1960 onwards retirement around 2005 2025 still 63,000 (60%) alive); 2035 still 27,600 (26%)
I
ratio inflows/outflows = 1.4
I
thats what happened with the first demographic dividend
I
long lasting liabilities: curse of the first demographic dividend
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Questions
Conclusions and Outlook
I
Funding structure of pension system unsustainable (and unfair)
I
Increasing importance of capital income: extending contribution base of the insurance and tax system
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Careful comparisons of developments over time (data)
I
Comparison with other countries
Bernhard Hammer
Age Reallocation through Public Transfers in Austria
Motivation and Overview Transfers-Categories in Detail Projections Conclusions and Outlook
Questions
Reminder
I
assignment of transfers to NTA-categories
I
estimation of the age distribution of in-kind transfers
I
what shall we include into the category ”Social Protection, Old Age” (TGSOAI)
Bernhard Hammer
Age Reallocation through Public Transfers in Austria