Business This is the "Austrian backpack", the Government's first option...

This is the “Austrian backpack”, the Government’s first option to save pensions

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The Government already manages several options to safeguard the long-term pension system, whose future has been questioned with its plan to link them indefinitely to the CPI and skip the sustainability factor. The third vice president and Minister of Economic Affairs, Nadia Calviño, confirmed this week that the solution is to make a complementary forecast system that, although not yet defined, points in several directions. The system of notional accounts, the British model known as “automatic enrollment”, mixed quotes … But the one that has more tricks to be carried out is what is known as “Austrian backpack”, an individual savings system in which Companies contribute funds throughout the worker’s working life and can be rescued in case of dismissal or when retirement arrives.

But both employers and unions have already shown clear reluctance to its implementation in Spain. The most belligerent have been the trade union centers, which see in this system a quick and easy way to encourage dismissal and cut the public pension system. “It would have dire consequences on the behavior of companies and workers,” the unions defend. Less compelling has been the Spanish Confederation of Business Organizations (CEOE), although it has doubts about the times of implementation, since it would have to completely change the collection systems and the withholding tables, for example, something «that can not be do in the short term and that has a journey to seen years ». It also considers that there are already protection mechanisms for workers, such as unemployment benefits, compensation and Fogasa.

Tensions with Podemos

The “Austrian backpack” is an old aspiration of Nadia Calviño, which already caused a lot of tension with her current government partners during the previous term. But now this idea has gained momentum with the arrival of José Luis Escrivá to the Ministry of Social Security. Therefore, the Minister of Economy wants to flee from “false controversies” because, as she argued on TVE, “the Government’s objective is to strengthen the pension system as much as possible.”

But really, what is «Austrian backpack». It is an individual capitalization account in which funds derived from the worker’s income are accumulated, which he can dispose of in the case of unfair dismissal, geographical mobility or retirement. This system works like a piggy bank to which the employer derives an amount from the worker’s gross salary – in the Austrian case it is 1.53% -. The capital is accumulated during the entire working life of the worker and is managed by private firms, which make it profitable in the stock and rental markets. But in anticipation of possible losses in these investments, the State guarantees 100% of these savings. This model was implemented in 2003 in Austria to make the labor market more flexible, reduce the cost of dismissal at zero cost for the company and complete the public retirement benefit. It is precisely the possibility that free dismissal can be implemented that has forced the frontal rejection of trade unions.

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