The pension insurance scheme is in place in order to provide financial security for insured persons and their family members in the form of pension benefits payable after the insured persons have left the labour market due to old age or for health reasons.
Types of pensions
A distinction is made between pensions in the insured’s own right (Eigenpension) and survivor’s pensions (Hinterbliebenenpension).
Pensions in the insured’s own right:
- Old-age pension
- Corridor pension
- Pensions for persons in physically demanding jobs (Schwerarbeitpension)
- Early retirement pension on grounds of long insurance periods
- Pension due to sickness
- Pension for survivors continuing the deceased’s business (Fortbetriebspension) (for self-employed persons only)
- Widow’s/widower’s pension
- Pension for surviving civil partners
- Orphan’s pension
The amount of a pension is calculated on the basis of the duration of the pension insurance and amount of the contributions paid. In Austria, you need to have paid contributions for a total of at least 15 years in order to be eligible for a pension.
Minimum insurance period
The term minimum insurance period refers to the number of insurance months that is required in order to be able to claim a pension. In Austria, persons born in or after 1955 may retire if they have acquired at least 180 insurance months (15 years) by the qualifying date. At least 84 of these insurance months (7 years) have to be based on gainful employment.
Statutory retirement age
The statutory retirement age is 65 for men and 60 for women. The retirement age for women is being increased step by step. All women born in or after June 1968 will have to work until the age of 65.
The state pays a compensatory allowance to recipients of very low pensions in the amount by which the actual pension falls short of the minimum pension. You are eligible for a compensatory allowance if you live in Austria and have a monthly income of less than EUR 909.42 (2018) as a single person. The income threshold for the joint earnings of spouses sharing a household is EUR 1,363.52 (2018).
Compensatory allowances are social benefits paid by the state. Any additional income/earnings the recipient may have will be directly set-off against the compensatory allowance payments.
Start of pension payments
Pensions in the insured’s own right are usually disbursed from the qualifying date onwards. Survivor’s pensions become due on the day following the death of the insured person provided that an application is made within six months after the day of death. If the application is filed after that time period, the pension becomes due as of the date of the application.
The new pension account
The new pension account was introduced in 2014. Since then, pensions for insured persons born in or after 1955 have been calculated exclusively on the basis of this pension account system.
Persons who were born in or after 1955 and have acquired at least one insurance month by 31 December 2004, received an initial credit. All insurance months acquired by the insured by the end of 2013 were combined and transferred to the new pension account as an initial credit entry.
No other pension calculation schemes have been in use since 2014. The only calculation method applied is the new pension account, which may be viewed by the insured at any time (online).
Pension entitlements in several countries
With business relations becoming increasingly international, the number of persons acquiring insurance periods in more than one European country is on the rise as well. Special rules apply if EU Member States, EEA countries, Switzerland or contracting states, i.e. countries with which Austria has entered into respective agreements, are involved. Insurance periods acquired in countries for which no agreement exists are not considered when examining whether the criteria required for a pension entitlement have been met or when determining the scope of pension benefits owed in Austria.
Pension entitlement only if insurance periods acquired abroad are included
In the event that the criteria for a pension entitlement in Austria are only met when including insurance periods acquired abroad, the Austrian pension is, as a rule, calculated as if all insurance periods – including those acquired abroad – had been acquired in Austria (fictitious full pension [fiktive Vollpension]).
In such case, the benefits are reduced in the proportion of the Austrian insurance periods to the overall insurance period (partial pension [Teilpension]). Foreign contribution bases are not included in this calculation.
Pension entitlement based on insurance periods acquired in Austria
In the event that the insurance periods acquired in Austria are sufficient to qualify for a pension, the amount of such pension is calculated exclusively on the basis of these Austrian periods unless the “pension calculation including insurance periods acquired abroad” leads to a more favourable result.