Austria’s new federal government is set to introduce sweeping pension reforms aimed at encouraging older citizens to stay in the workforce longer. The reforms, designed to ease the financial strain on the state’s coffers, are expected to generate up to €3 billion over the coming years.
The government’s strategy includes both revenue-generating and structural measures. Among the key proposals is an increase in health insurance contributions to 6%, alongside significant changes to the “corridor pension” scheme. Under the proposed changes, the required insurance years for early retirement would rise from 40 to 42, and the earliest retirement age would be pushed from 62 to 63.
In an effort to incentivize employment until the statutory retirement age of 65, a new “partial pension” scheme is under consideration. This would allow employees to reduce their working hours by 50%, receiving half of their salary and half of their pension benefit in return.
The government also seeks to promote post-retirement employment. Social security contributions paid by employers would be abolished for retirees, while employees would benefit from a flat 25% tax rate on additional income earned post-retirement.
However, working beyond retirement age is already a reality for many Austrians. A recent study by Statistics Austria revealed that in 2024, 12.2% of pensioners aged between 50 and 74 remained in the workforce for at least part of the year. Notably, nearly one-fifth of these individuals cited financial necessity as the primary reason for continuing to work, with 17.1% admitting that they could not afford to retire fully.
The employment rate among older workers also underscores the challenge. While 85.4% of Austrians aged 25 to 54 are employed, the figure drops significantly to 58.8% among those aged 55 to 64—those approaching retirement.
To address this, the government’s program outlines plans to enhance training opportunities for older employees and provide pathways for workers in physically demanding jobs to transition into less strenuous roles. Companies will also be encouraged to initiate retraining programs early, ensuring that older employees can continue contributing in age-appropriate positions.
With these reforms, Austria’s government hopes to not only stabilize public finances but also reshape the landscape of retirement, ensuring that working later in life is both feasible and financially rewarding.
