Josep Maria Bové presents the success model of the Austrian Backpack in Barcelona with international experts
Josep Maria Bové, full academician of the Royal European Academy of Doctors-Barcelona 1914 (RAED) and honorary consul of Austria for Catalonia and Aragon, participated last October 16 in a technical conference organized by the Catalan labor Promotion of National Work, Advantage Austria, the Austrian economy office abroad, and the Honorary Consulate of Austria in Barcelona which was entitled “La Mochila Austríaca. Los fondos de pensiones ocupacionales y los regímenes de indemnización por despido” (The Austrian Backpack. Occupational pension funds and severance pay schemes). The session was held at the headquarters of Promotion and also had the participation of Christian Ebner, Austrian ambassador in Spain, Andreas Schmid, Austrian commercial delegate in Barcelona, and Christian Böhm, executive director of the Austrian pension fund APK Pensionskasse AG and member of the board of Pensions Europe, the European association that groups pension fund associations from numerous European countries. This is the first time that this new pension system has been discussed in Spain.
The so-called Austrian Backpack is an individual capitalization fund implemented in 2003 in that country oriented towards retirement or compensation for dismissal or voluntary withdrawal and guaranteed 100% by the State. For Bové, the Austrian system wouldn’t only allow Spain to reduce the galloping Social Security deficit, but would guarantee the viability of the current public pension system and minimize the tensions that occur in the current Spanish system in unfavorable economic or labor situations.
“The data show that the Austrian model has incentive effects on contracting: in June 2008 the unemployment rate in Spain was 10.4%, compared to 3.7% in Austria; in March 2013, the figure is it increased in Spain to 26.9%, while in the Central European country it was 5.7%; and in December 2018, Spain, 14.3%, and Austria, 4.7%. In adverse economic conditions, the system is greatly stressed by the loss of contributors (who also go on to collect unemployment), an inconvenience that is minimized in the Alpine country”, explained the academician.
President of Bové Montero y Asociados, one of the main Spanish firms in the field of auditing and consulting, the expert also considers that this model has incentive effects on the labor market, since it reduces and even eliminates severance pay, covered for the fund, and urged the Spanish Executive to implement it after having already studied it in detail and see that it has been a successful model for more than a decade.
“While the Spanish Government admits that it studies the possible implementation of a similar individual capitalization fund, government sources have already indicated that it isn’t a priority and that a long-term debate is necessary. I believe that it’s a priority, like all initiative that contributes to the sustainability of the public pension system”, says Bové. Data in hand, the academician considers that the State flees from a structural problem that no government has wanted or has been able to face.