
The Ministry of Social Affairs has finalized the draft law introducing a partial pension. From next year, it will be possible to continue working part-time while drawing a portion of one’s accrued pension. To finance this, the early-retirement scheme will be gradually restricted: it will henceforth run for three years instead of the current five. The law is expected to pass the National Council before summer.
Social Minister Korinna Schumann (SPÖ) welcomed the “really difficult negotiations” having ended positively. She highlighted that, for the first time, one need not choose between pension or work—but may combine both—and that the partial pension should encourage people to remain in the workforce longer.
Projected Savings
The ministry also anticipates budgetary relief. In the first year, partial-pension outlays are expected to total €197 million, rising to €402 million in year two, based on an estimated 10,000 beneficiaries. Savings from the early-retirement reform are smaller—an estimated €59 million in 2026 and €89 million in 2027. Last year, about 36,500 people used the early-retirement scheme.
Under the reform, one may draw a partial pension once eligible for a full pension: at age 63 under the corridor rule; at 62 under the long-service rule; at 60 for heavy-labour pensions; and at the standard ages (65 for men; gradually aligned for women through 2033).
25 %–75 % Work Reduction
Work hours must be cut by at least 25 % and at most 75 %, with employer consent. Three “corridors” apply:
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A 25–40 % reduction pays 25 % of the accrued pension credit.
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A 41–60 % reduction pays 50 %.
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A 61–75 % reduction pays 75 %.
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Early-retirement penalties still reduce the pension credit (e.g., 5.1 % per year under the corridor rule; 4.2 % under the long-service rule).
Example: At 63, a person with €3,000/month pension credit who cuts hours by 50 % receives 50 % of the credit (i.e., €1,500) minus a 10.2 % penalty (two years at 5.1 %), yielding a €1,347 partial pension, which is added to salary. Upon full retirement, the frozen portion plus any further accrued credit is paid.
Merging Early Retirement and Partial Pension
The existing scheme—reducing hours by 40–60 % with a wage subsidy—will merge into the partial pension. Ultimately, early retirement will only be available until partial pension eligibility, cutting subsidized duration from five to three years. In 2026, a transition allows 4.5 years; 2027, four years; and 2028, 3.5 years.
After a brief review, the reform should pass the July session of the National Council. It remains unclear if the sustainability mechanism—which from 2030 will control runaway pension costs—will be finalized in time; Schumann said talks are in their “final stages.”