AUSTRIA - Austria's governing coalition is to establish a sustainability commission to tackle increasing life expectancy rather than automatically triggering an increase in the statutory retirement age.

The agreement has put an end to month-long discussions between social minister Erwin Buchinger from the left-of-centre SPÖ and economy minister Martin Bartenstein from the conservative ÖVP.

While the conservative coalition partner wanted an automatic link between an increase in life expectancy of more than six months and a raise in retirement age, Buchinger noted he would not agree to the use of "a soulless calculation machine" to decide on pension issues. (See earlier IPE story: Pensions "safe until 2050" - Austrian minister)

Instead, an increase of life expectancy of more than six months compared to 2009 will call into action a commission which then has to check what consequences the increase has on the pension system.

If it causes the earnings-income ratio in the first pillar to drop by more than one percentage point the social minister and the finance minister have to decide which measures have to be taken in order to ensure the sustainability of the pension system.

"This agreement will ensure the pension system is safe even in times of crisis, in times of extreme economic or demographic developments," Buchinger explained in Vienna today.

He expects the trigger to be set off for the first time in 2016 at the earliest and even then he said the earnings-income ratio is unlikely to have dropped enough to require any further action.

Buchinger added "from the current point of view" the only things that would trigger actual changes to the retirement age or contributions "are major changes to the longevity of more than six months compared to 2009 or a really bad economic development" - both of which he does not expect to happen.

The minister noted this amendmend to the current law on pensions, which is expected to be passed by the council of ministers next Wednesday, wil not be made part of the constitution - meaning the arrangement could still be changed again by future governments.

"Questions regarding pensions must remain open to political dialogue," Buchinger said explaining why he does not want the bill to be incorporated into the constitution.

"But if future governments are wise they will do something similar to what we are doing," he added.

In the same amendment, the government has also extended a provision until 2013 allowing people who have paid into the social insurance system for 45 years to retire early on their full pension.

Pensions of people with fewer insured years will see their entitlements reduced for every year they leave the labour market earlier than the statutory retirement age of 65 for men or 60 for women.

And for the first time, months in which workers were off sick will count towards the 45 years of contributing to the social insurance system.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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