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The Ministry of Social Affairs has finalized the draft law for introducing a partial pension. From next year, it will be possible to continue working reduced hours and, at the same time, draw a portion of the pension that has already been saved. To this end, partial retirement will be gradually restricted. In the future, it can only be used for three years instead of the previous five. The corresponding law is expected to pass the National Council before the summer.
At a press conference, Social Affairs Minister Korinna Schumann (SPÖ) expressed her delight that the “tough negotiations” on the matter, due to its complexity, had come to a positive conclusion. What she particularly likes is that, for the first time, it is no longer a case of either pension or work, but that both can be combined. The partial pension is also intended to help people stay in employment for longer.
Savings expected
The Ministry of Social Affairs is also hoping for savings as a pleasant side effect in difficult budgetary times. The partial pension is expected to generate savings of €197 million in the first year and €402 million in the second. Around 10,000 people are expected to take advantage of the partial pension. The savings potential for reforming partial retirement is significantly lower. It is expected to save 59 million euros in 2026 and 89 million euros the following year. Last year, almost 36,500 people were in partial retirement.
Regarding the reform itself, partial retirement can be initiated as soon as you are eligible for an old-age pension. In the future, this means from the age of 63 for the corridor scheme, from 62 for the long-term insured scheme—previously often referred to as the “Hackler scheme”—from 60 for the heavy worker pension, from 65 for the old-age retirement for men, and 65 for women, depending on when they join. This is because the process of harmonization with the retirement age for men will continue until 2033.
Reduction of between 25 and 75 percent
Work must be reduced by at least 25 percent and at most 75 percent, subject to the employer’s consent. Three corridors have been set up at the request of the shift work sectors. Those who reduce their working hours by 25 to 40 percent will receive an additional 25 percent of the amount saved in their pension account. If working hours are reduced by 41 to 60 percent, 50 percent of the previous credit is paid out in addition to the salary. Anyone who reduces their working hours by 61 to 75 percent, i.e., only has a comparatively low income, will receive 75 percent of the entitlement accrued in the account.
It should be noted that in the case of early retirement, the respective deductions reduce the credit. For example, the corridor pension is 5.1 percent per year, and the long-term insurance scheme is 4.2 percent.
An example: A person is entitled to a corridor pension at the age of 63 and wants to take a partial retirement. Up to that point, their account had been credited with 3,000 euros per month from their previous working life. If she now reduces her working hours by 50 percent, 50 percent of the account is closed, and she receives EUR 1,500 minus a 10.2 percent deduction (for two years), i.e., EUR 1,347, as a partial pension. This amount is added to the salary. If the person then actually retires completely at some point, the retirement pay is composed of the part frozen for the partial pension, plus the part that has remained in the account and continued to grow as a result of gainful employment.
Partial retirement merges with partial pension
Partial retirement, where you reduce your working hours by 40 to 60 percent and receive wage compensation, is in turn merged with the partial pension. This means that in the future, you will no longer be eligible for a five-year subsidy reduction of your working hours, but only for three years. Specifically, partial retirement will only apply for as long as no partial pension is possible or no pension entitlement exists.
Therefore, anyone who is 60 and can take corridor retirement at 63 is then entitled to partial retirement benefits for three years. If the person is not entitled to a corridor pension, for which 42 years of insurance must be proven in the future, they can enter partial retirement for three years starting at 62. The reduction to three years is gradual. In 2026, the option will still be available for 4.5 years, followed by four years in 2027 and 3.5 years in 2028.
Following a brief review, the reform is expected to be passed by the National Council during its July plenary session. It is not yet clear whether the sustainability mechanism, which will regulate a response to out-of-control pension costs from 2030, will be ready by then. Schumann said that negotiations were “in the final stages.”
- source: APA/picture: pixabay.com
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