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Experience with Austrian Severance Pay Funds

Experience with Austrian Severance Pay Funds. Dr. Ingrid KUSTER Head of the Legal Services Department Styrian Chamber of Commerce Ljubljana, 17.9.2012. The old severance pay system. Twenties of the twentieth century: company staff members Since 1979: workers

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Experience with Austrian Severance Pay Funds

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  1. Experience withAustrian Severance Pay Funds Dr. Ingrid KUSTER Head of the Legal Services Department Styrian Chamber of Commerce Ljubljana, 17.9.2012

  2. The old severance pay system • Twenties of the twentieth century: company staff membersSince 1979: workers • Financial bridging support when job terminated by employer (few exceptions) • Employee entitlement versus the employer • Minimum entitlement 2 months compensation (after 3 years of service) • Maximum entitlement 12 months compensation (after 25 years of service) • Currently still around 1.1 million beneficiaries

  3. The new severance pay system • Since 1.1.2003 • Monthly provision contribution of 1.53% of the employees monthly remuneration • To be established by the employer at an occupational severance pay fund • Employee receives a personal account at the occupational severance pay fund • Capital guarantee

  4. Occupational severance payment funds • 10 occupational severance payment funds • 4.3 billion Euro • 2.64 million beneficiaries • 19000 employers have moved from the old severance pay system over to the new severance pay model

  5. Advantages of the new severance pay model • Reduced conflict • Entitlement for all employees • Increased mobility • Continuous and earlier entitlement • Advantages for women + short term employment (seasonal) • No burden threatening company survival

  6. Disadvantages of the new severance pay model • Additional costs for seasonal industries • Capital market situation • No binding of the employee to the company • Employees don't view the new severance pay system as a provision for old age

  7. (Performance of the occupational severance pay funds Source: Austrian Control Bank, * 2011 provisional platform survey; y-axis: per cent, x-axis: year; average 2.6 %)

  8. Thank you very much for your attention and all the best!

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