VIENNA - A report on Austria's pensions system, by the International Monetary Fund, Washington, warned that the country's finances will be "unsustainably" burdened by growing public pension liabilities unless urgent reforms are taken in the next 10 to 15 years.
But industry experts in Vienna said any Austrian government is unlikely to have the strength and will needed to push through politically unpopular reforms that would ease the burden on the state pension system and encourage more people into private savings.
The report, published in December as an IMF working paper, recommended measures such as harmonizing the retirement age of males and females and providing incentives for later retirements. It also suggested measures aimed at reducing state pension benefits, such as lengthening benefit assessment periods.
Waltraud Viehboeck, a senior consultant with Aon Jauch & Hubener, Vienna, said the Austrian pensions industry has already been lobbying for those measures.
"There is a broad majority of politicians who know there is a problem, and they want to fix it. But they also know canceling early retirement is political suicide," she said.
As well as cutting back on the pay-as-you-go state system, pension experts want the government to entice more people to save privately for retirement as well. Only 12% do so at the moment, according to figures from the Ministry of Finance, Vienna.
In 2000, the government introduced a program that gave limited tax breaks to individuals who contributed to selected private pension schemes.
"There is a push to have that extended, have more tax breaks and higher contributions," said Walter Schmoiger, head of asset management at the private e1.6 billion ($1.72 billion) multiemployer pension scheme OPAG Pensionskasse, Vienna.
But analysts said the problem with extending those generous breaks is the precarious state of the government's finances right now.
Austria is close to breaching its budget deficit limit of 3% of gross domestic product, and to ensure it doesn't go beyond that limit, there can be no new tax breaks or big spending binges.
"The problem is they can't introduce new tax breaks for private pensions, but the pay-as-you-go system is not sustainable. Plus, people want the state pension system, it is still good, they know they will not be poor when they retire," said Ms. Viehboeck.
Individuals are required by law to contribute, on average, about 10% of salary to the state pension system. Employers match this with about 12%.
Male workers are allowed to retire at age 611/2, while women can retire at age 561/2, and the method used in calculating benefits is the 15 highest-paid years of the career.
Austria, according to the IMF, faces a particularly challenging retirement savings problem. Of the European Union countries, it has the highest expenditure as a percentage of GDP on pensions, at 14.5%, and the third-lowest work force participation rate among individuals aged 55 to 64. And like all Western countries, Austria's population is aging as people live longer and have fewer children.
The publication of the IMF report came at a difficult time in Austrian politics, too.
Parliamentary elections last year failed to produce an outright majority government, and behind-the-scenes wheeling and dealing aimed at forming a governing coalition is continuing.
"There's still a lot of horse-trading happening; they are trying to form a coalition still," said Mr. Schmoiger. "But there is a consensus that reform must happen. I think once the government does take shape, it will be maybe a year after that and the pension reform will continue," he said.