From 2026, there will be a fundamental restructuring of the gradual transition to retirement in Austria: partial retirement will be introduced, while partial retirement will be gradually reduced. The aim is to keep older employees in the workforce longer and at the same time relieve the budget of the Public Employment Service (AMS).
New partial pension – no AMS funding necessary
The new partial pension allows for a gradual withdrawal from working life. Employees can reduce their working hours by 25 to 75 percent and receive a pro rata pension of 25, 50 or 75 percent of their regular pension entitlements. The benefit is paid directly from the pension insurance, which means that AMS funding is no longer necessary. The prerequisite is that there is already an entitlement to some form of old-age pension – such as a corridor, heavy labour or long-term insured pension. The partial pension can be applied for from 1 January 2026 and is to be less administrative and easier to handle than partial retirement.
Meanwhile, partial retirement still possible
Although partial retirement will remain in place for the time being, it will lose much of its attractiveness. For new agreements, the subsidised term of the partial retirement allowance will be gradually shortened – from 4.5 years in 2026 to just three years from 2029. In addition, the state subsidy for wage compensation will be reduced
Conclusion: Partial pension simpler, but less lucrative
While partial retirement scores with less bureaucracy and simpler rules, it usually remains financially less lucrative than the previous partial retirement. In return, the subsidy for employers will be significantly simplified, as it will no longer be necessary to apply to the AMS.
Overall, the reform marks a clear change in the system: partial retirement will expire by the end of 2028, after which partial pension is to be the central instrument for a flexible pension transition.
Tip: If possible, start partial retirement in 2025!
