Partial Retirement in Austria: Opportunities for Employees and Employers from 2026

Start­ing Jan­u­ary 1, 2026, Aus­tria will intro­duce par­tial retire­ment (Teilpen­sion) – a flex­i­ble mod­el that allows old­er employ­ees to reduce work­ing hours while receiv­ing a por­tion of their pen­sion. This cre­ates win-win sce­nar­ios for both employ­ees and employ­ers.

What is Partial Retirement?

Eli­gi­ble indi­vid­u­als can reduce their work­ing time between 25% and 75% and simul­ta­ne­ous­ly receive a pro­por­tion­ate pen­sion pay­ment. Unlike pre­vi­ous rules, it no longer requires mar­gin­al employ­ment.

Benefits for Employees

• Smooth tran­si­tion into retire­ment
• Social secu­ri­ty con­tri­bu­tions con­tin­ue
• Flex­i­ble arrange­ment of time and dura­tion

Benefits for Employers

• Retain expe­ri­enced staff longer
• Plan staffing tran­si­tions grad­u­al­ly
• Boost employ­er brand­ing with age-inclu­sive poli­cies

Eligibility

Applic­a­ble for those enti­tled to:

• Old-age pen­sion
• Cor­ri­dor pen­sion (from age 62)
• Long-term insur­ance pen­sion
• Heavy labor pen­sion

A writ­ten agree­ment on work­ing time reduc­tion with the employ­er is required.

Pension Calculation

Depend­ing on the reduc­tion in work­ing hours:

• 25–40%: 25% of the pen­sion account val­ue
• 41–60%: 50% of the pen­sion account val­ue
• 61–75%: 75% of the pen­sion account val­ue

Part of the pen­sion account is closed; the rest remains active and con­tin­ues to accrue con­tri­bu­tions.

Tax & Reporting Considerations

• Dual income (work + pen­sion) may lead to tax lia­bil­i­ties in the annu­al employ­ee tax assess­ment.
• Work­ing time increas­es over 10% of the agreed lev­el must be report­ed.

Employer Action Points

1. Proac­tive­ly engage with staff
2. Offer flex­i­ble part-time options
3. Con­sult tax advis­ers like Heinz Kobled­er – Tax Advi­sors

Conclusion

Par­tial retire­ment is a for­ward-look­ing tool for shap­ing retire­ment tran­si­tions. It sup­ports employ­ees while help­ing employ­ers retain tal­ent longer. Heinz Kobled­er – Tax Advi­sors is hap­py to advise you indi­vid­u­al­ly.