Government Introduces Partial Pension and Pension Cap

The government has agreed on a pension package that is to be passed in the National Council in July. The partial pension will complement the existing partial retirement. This will make it possible from next year to continue working in a reduced capacity while simultaneously drawing on a portion of the pension already accrued. If the savings in the pension system are not sufficient by 2030, a sustainability mechanism will also be implemented, obligating the future government to take further measures.

The sustainability mechanism is "a statutory absolute expenditure cap for the pension system," said NEOS club chairman Yannick Shetty at a press conference on Wednesday. This is to take effect in 2030. If not enough savings are made in pensions by then, the government must choose from a bundle of possible measures.

Sustainability Mechanism from 2030

According to the draft law introduced in the National Council on Wednesday, in this case, the required insurance years for the corridor pension are to be increased in half-year steps from January 1, 2035. Other cost-reducing measures may include changes regarding the contribution rate, account percentage (which is responsible for the pension amount), retirement age, pension adjustment, and eligibility requirements.

The cost reductions should be equivalent to the effect of raising the actual retirement age by one year in 2030 - Shetty mentioned under 2.5 billion euros. A tolerance value for an overrun is specified in the law as 0.5 percent of the cumulative target path. Once a year, the Minister of Social Affairs is also obliged to provide the National Council with a report on the sustainable security of the pension system.

Partial Pension "Win-Win Situation" for State and Employees

With the partial pension, it is possible to continue working in a reduced capacity while already receiving a portion of the pension. This can be taken as soon as one is eligible for an old-age pension. Working hours can be reduced between 25 and 75 percent, depending on which a certain portion of the amount accrued in the pension account up to that point is added to the remuneration.

Many people would like to gradually transition out of working life, said ÖVP club chairman August Wöginger. The partial pension enables this without state subsidies. Meanwhile, taxes and social security contributions are still paid - a "win-win situation" for the state and the beneficiaries.

Pension Package Focuses on Older Workers

The most important thing is to keep people employed, especially older ones, emphasized SPÖ club chairman Philip Kucher. Pension cuts and an increase in the statutory retirement age should be prevented in the meantime. Other planned measures include the development of an incentive and monitoring system to promote employment from the age of 60 or the expansion of age-appropriate workplaces and preventive measures for healthy working in old age.

Partial retirement, where working hours are reduced by 40 to 60 percent and a wage compensation is received, will be merged with partial pension. In the final stage, this means that in the future, one will no longer be able to reduce working hours with subsidies for five years, but only for three years. Specifically, partial retirement only applies as long as no partial pension is possible or no pension entitlement exists.

Reform "hardcore antisocial" for FPÖ

For FPÖ social spokesperson Dagmar Belakowitsch, the reform is "hardcore antisocial," as she stated in a press release. The sustainability mechanism "de facto lays the foundation for raising the statutory retirement age," she accused the government.

The Trade Union Federation (ÖGB) sees the partial pension as a "great achievement." It is "a socially secure and flexible way to keep people in the workforce longer," said federal manager Helene Schuberth. However, there are significant incentives missing to keep older workers in the workforce longer and healthier.

The Federation of Austrian Industries (IV) calls for structural reforms that are still lacking. "Steps such as the decided restriction of the corridor pension or even a partial pension, if practicably designed for companies, are to be supported," noted Secretary General Christoph Neumayer.

IV for structural reforms

The Federation of Austrian Industries (IV) calls for structural reforms that are still lacking. "Steps such as the decided restriction of the corridor pension or even a partial pension, if practicably designed for companies, are to be supported," noted Secretary General Christoph Neumayer.

Economics Minister Wolfgang Hattmannsdorfer (ÖVP) emphasized in a written statement that with the new partial pension and stricter rules for partial retirement, targeted incentives are created to stay longer in the workforce. "This secures know-how, supports the economic location, and sustainably relieves our pension and social security system." Only if it succeeds in closing the gap between statutory and actual retirement age will the welfare state remain affordable.

(APA/Red)

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