Farmers’ Old Age Security Scheme

Mandatory insurance

• Self-employed entrepreneurs and spouse/partner working in the agrarian sector (e.g. farmers, foresters, winemakers, fish farmers or horticulturists) and who are not compulsorily insured in the statutory old age public pension scheme; agricultural enterprise must exceed minimum size of cultivated area.
• Other family members who are at least 18 years of age, who work full-time for the family business and are not compulsorily insured in the statutory old age pension scheme.

Opting out

• Under certain conditions, a person can request exemption from the scheme.

Voluntary insurance

• Under certain conditions; formerly mandatorily insured persons (as agricultural entrepreneurs or as spouses) can request to continue insurance on a voluntary basis.

General finances

• Mainly tax-financed out of the federal budget.
• Partly PAYG-financed from insurance contributions.

Contribution rates

• Fixed (flat-rate) monthly contribution payments independent of declared income (set by the Federal Ministry of Labour and Social Affairs) for insured entrepreneurs and spouse/partner; contributions are lower (fixed at 50%) for other insured family members.
• Insured entrepreneurs and spouse/partner can request state subsidies to contribution payments dependent on annual income.

Taxation of contribution payments

• Tax exemptions for insurance contributions excluding state subsidies (100% after 2024) capped by maximum amount.

• Self-administered federal and regional pension carriers take administrative responsibility for all affairs related to the scheme: the ‘Social Insurance for Agriculture, Forestry and Horticulture (SVLFG)’ and a number of regional insurance carriers.

Qualifying conditions

• Statutory retirement age increases to 67 for insured persons born after 1963; minimum insurance period: 15 years; relevant insurance periods are not limited to periods covered by the Farmers’ scheme.
• Reduced standard retirement age (increase to 65) for insured person with minimum insurance period of 45 years.

Early retirement

• Available at age 65 with minimum insurance period of 35 years with negative (permanent) adjustments to pension benefits (0.3% per month).
• Available up to 10 years before statutory retirement age for insured entrepreneur/spouse (not available to ‘other family members’) with negative (permanent) adjustments to pension benefits (0.3% per month), if minimum insurance period of 15 years is met and if spouse is/has been entitled to standard/early old age pension.

Deferred retirement

• Retirement can be deferred.

Combining employment & retirement

• Termination of employment is not a precondition for claiming pension benefits.
• After reaching statutory retirement age continuous employment is permitted without earnings limit; income ceilings apply to retired persons below standard statutory retirement age.

Pension benefits

• Primarily based on the length of insurance/credited period.
• Benefits allow only for partial financial security in old age.

Benefit calculation

• Based on the multiplication of (a) the personal ‘increment factor’ (total of months covered as insurance/credited periods multiplied by a predefined factor), (b) the ‘pension type factor’ for old age pensions (= 1), and (c) a fixed ‘general pension value’ (representing the monthly pension value per year of contributions paid).
• Benefit calculation differs for insured family members with regard to ‘increment factor’ (resulting in half the amount compared to self-employed entrepreneurs and spouse/partner).
• Adjustments: yearly adjustment of pension value according to the pension value of the statutory old age pension scheme.

Taxation and social security contributions

• Pension benefits are subject to income tax (100% for pensions granted in 2040) according to the general tax rules.
• Mandatory contributions for health insurance (shared in parity between retired person and pension insurance carrier) and long-term care insurance (fully paid by retired person).