Pension Reform: Continuing to Work Past Retirement Age to Become More Tax-Attractive

Occupational Provision to Be Strengthened

For additional earnings alongside the pension, 40 insurance years remain the requirement. For women, a threshold of 34 insurance years initially applies, which is to be gradually aligned with the rule for men by 2033. This dismantles a long-standing unequal treatment within the pension system.

The reform is supported by a broad coalition. In the Council of Ministers, SPÖ, ÖVP, and Neos jointly adopted the key points. The Economic Chamber and the social partners were involved in the preparations, with the Economic Chamber in particular having pushed for a swift implementation of the incentives for older employees.

Political Backing and Criticism

Labor market expert Korinna Schumann, who is accompanying the reform process, emphasizes the significance of the activity allowance for both the self-employed and salaried employees alike. The measure is intended to prevent experienced employees from switching to retirement early for purely financial reasons.

Partial pension — that is, the gradual reduction of working hours before final retirement — remains a complementary instrument. It is to be better interlinked with the new activity allowance in the future, so that transitions from working life into retirement can be designed more flexibly.

Outlook on Implementation

Critics point out that the postponement of the central measures to 2028 delays the hoped-for swift relief. Supporters counter that careful implementation is more important than a rapid start, since mistakes in provision would have long-term consequences.

Overall, the reform aims to adapt the pension system to demographic realities and to increase the incentive for longer working lives. The combination of allowance, strengthened occupational provision, and more flexible transitions is intended to benefit both employees and employers.

The next steps include parliamentary deliberation on the draft legislation as well as technical preparation by the pension funds. Observers expect that the final adoption will still take place in 2026, so that the regulations can enter into force on schedule in 2027 and 2028 respectively.