On 17 July 2025, the Federal Council gave final approval to the legislative package introducing the partial pension scheme by 40 votes to 19. This opens the door for a model which, for the first time, will enable a flexible transition from working life to retirement as from 1 January 2026.
What exactly does this mean?
Workers eligible for obtaining retirement pension payments will in the future be able to reduce their working hours and receive part of their pension payments at the same time. Those eligible include people who are already entitled to a corridor or heavy labour pension. In this case, there will be pro-rated partial pension and pro-rated salary payments. The familiar statutory reductions will continue to apply.
A sustainability mechanism to keep the budget in check
A sustainability mechanism has also been introduced: if pension expenditure exceeds the statutory budget path under the General Social Security Act (ASVG) by more than 0.5 %, reform measures are automatically triggered. From 2035, this will include a gradual increase in the number of insurance years required for the corridor pension and further cost-cutting measures.
Tighter restrictions on partial retirement
As the partial pension option is introduced, the existing partial retirement arrangements will be restricted significantly. In the future, the maximum period of entitlement to partial retirement will be reduced from five to three years and the minimum duration of employment required will increase from 15 to 17 years. This means that partial retirement will still be possible, but subject to markedly stricter conditions.
With the partial pension scheme, legislators are sending a clear signal. The aim is to create more flexible and individual retirement models whilst at the same time ensuring the financial sustainability of the pension system.
Our KWR Employment Law team will be happy to assist you in understanding the new regulations, examining individual options and ensuring that transition into retirement complies with legislation.
