The federal government, consisting of ÖVP, SPÖ, and NEOS, is working on a comprehensive reform of the pension system in Austria. The goal is to significantly expand the so-called second pension pillar and make it accessible to more people.

The focus is on a general pension fund contract, which aims to simplify access to an additional pension. A start is planned for the year 2027, as indicated by the government program and official documents.

Severance Pay Becomes Supplementary Pension

The reform builds on the existing "Abfertigung Neu" (new severance pay). Employers currently pay 1.53 percent of the monthly gross salary, including special payments, into an occupational pension fund starting from the second month of employment.

This balance is currently often paid out as a lump sum, for example, when changing jobs or upon retirement.

In the future, it should be easier to convert this accumulated capital into an ongoing supplementary pension. This would turn the one-time payout into a regular payment in old age.

More People Benefit

So far, only a portion of employees take advantage of the opportunity for an additional occupational pension. According to the Financial Market Authority, around 24 percent of employees are entitled to benefits from pension funds.

The new model aims to change this. The planned reform aims to significantly broaden access and open the additional pension to large parts of the population.

New Rules for Retirement Planning

A central element is the voluntary, regular, and cost-free transfer of severance pay into a pension fund.

Also planned are:

The second pillar is explicitly intended to remain a supplement to the state pension and not replace it.

More Control in Saving

In the future, employees should be able to decide more independently how their money is invested. Even today, there are certain options in pension funds, and these are to be expanded and standardized.

Depending on the model, different risk levels can be chosen, which can also affect the amount of the additional pension in the long term.

Access Only Limitedly Possible

Safeguards are to remain in place in the future. In certain situations, access to accumulated capital is provided.

According to current government documents, however, there is no plan for a complete, unrestricted payout of the entire balance in every case, but rather targeted regulations for special life situations.

Start Planned from 2027

The schedule foresees that the new model will be available from 2027. The legal implementation and specific design are currently being developed.

Further details are expected in the course of 2026.

(Ed.)

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