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Austria’s government is preparing a major reform of the country’s occupational pension system, aiming to give all employees access to a supplementary pension and strengthen what is known as the “second pillar” of retirement provision.
According to information obtained by Heute, the new model is expected to be approved in the Council of Ministers on Wednesday. It will then be presented by Finance State Secretary Barbara Eibinger-Miedl (ÖVP), Labour Minister Korinna Schumann (SPÖ), and Foreign Minister Beate Meinl-Reisinger (NEOS). Coalition negotiations reportedly continued late into Tuesday night to finalize the details.
A New Path to a Lifetime Supplementary Pension
The core objective of the reform is to allow employees to voluntarily and cost‑free transfer their severance contributions (“Abfertigung Neu”) into a pension fund, enabling them to build an additional lifelong pension. The coalition had already agreed on this principle in December 2025; the current package focuses on the legal implementation.
Although all employees are part of the Abfertigung Neu system — with employers contributing 1.53% of gross salary into employee severance funds — only a small share has so far been able to convert these savings into a lifelong supplementary pension. The reason: only companies with an existing contract with a pension fund could offer this option, leaving roughly three‑quarters of employees with only the traditional one‑time payout.
General Pension Fund Contract to Open Access for All
The reform’s centerpiece is the introduction of a General Pension Fund Contract. This new mechanism will give every employee the right to transfer their severance savings into a standardized pension fund product, regardless of whether their employer has an existing pension fund agreement.
Employees will be free to choose:
- Transfer the severance savings into the new pension fund model and receive a lifelong supplementary pension upon retirement, or
- Continue opting for the one‑time payout, as before.
More Flexible Investment Options for Higher Returns
A second major change concerns the investment strategies of employee severance funds. In addition to the current conservative investment model, funds will be required to offer an alternative with greater flexibility and potentially higher returns. The aim is to generate stronger long‑term growth over decades, ultimately resulting in a more substantial supplementary pension.
Turning Severance Pay into a Real Pension Component
The long‑term vision behind the reform is to shift the perception of Abfertigung Neu: from a one‑off payment at the end of a career to a meaningful building block of retirement income. By expanding access and improving investment options, the government hopes to strengthen the second pillar of Austria’s pension system and provide more financial security for future retirees.
Planned Start Date: 1 January 2028
The new model is expected to take effect on 1 January 2028, giving institutions and employers time to adapt to the new framework.
- source: heute.at/picture: pixabay.com
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