Changes to partial retirement from January 1, 2024

Since the year 2000, employees and employers have been able to agree on partial retirement supported by the Public Employment Service. There are two basic models, namely continuous (continuous) partial retirement and blocked partial retirement with a subsequent leisure phase. In addition to various other adjustments, the amendment to the Unemployment Insurance Act will increasingly restrict the block-time variant of partial retirement with effect from January 1, 2024 and will be completely abolished from January 1, 2029.

Block time agreements 

Blocked working time agreements are forms of partial retirement with different weekly amounts of reduced normal working hours. Blocked partial retirement is gradually being phased out by reducing the maximum term for such models (maximum interval between the start of partial retirement and reaching the standard retirement age, currently 5 years) by six months each year from January 1, 2024.

The partial retirement benefit will be gradually reduced for blocked partial retirement with a start date between January 1, 2024 and December 31, 2028:

There is no longer an entitlement to partial retirement benefit for all block time agreements whose term begins on or after January 1, 2029.

For block time agreements with a term beginning before January 1, 2029, the additional expenses will only be partially compensated by the partial retirement allowance in the following amount:

• Block time agreements with a start date before 2024 or with a start date in 2024 and application for partial retirement benefits by 12.9.2023: at a rate of 50%
• Block time agreements with a start date in 2024 and application for partial retirement benefits after 12.9.2023: to the extent of 42.5%
• Block time agreements with a start date from 2025: to the extent of 35%
• Block time agreements with a start date from 2026: at a rate of 27.5%
• Block time agreements with start of term from 2027: to the extent of 20%
• Block time agreements with a start date from 2028: to the extent of 10%

There are also changes to the calculation of salary compensation in the area of partial retirement benefits. One of the prerequisites for entitlement to partial retirement benefits is the payment of wage compensation by the employer, who in turn receives a subsidy from the Public Employment Service Austria (AMS). This wage compensation cushions the economic disadvantages of part-time employment for employees.
Previously, the subsidized wage compensation amounted to 50% of the difference between the average remuneration in the last year before partial retirement (upper value) and the remuneration converted to the new reduced working hours from the last month before partial retirement (lower value).

In future, the lower value corresponds to the remuneration that would have been due in the last 12 full calendar months with correspondingly reduced working hours. The upper and lower values therefore have the same reference period, so that the lower value represents a percentage of the upper value after deduction of overtime pay (overtime lump sums). This avoids random results in the future.