Statutory Pension Scheme for Farmers
Pensionsversicherung nach dem Bauern-Sozialversicherungsgesetz
Coverage
Mandatory insurance
- Self-employed entrepreneurs working in the agrarian sector (e.g. farmers, foresters, winemakers, fish farmers or horticulturists) and their spouse/partner/children/parents if they work full-time in the enterprise, are at least 15 years old and are not subject to mandatory insurance in the statutory pension scheme for employees and equally treated persons.
- Persons formerly insured as farmers during military service (or alternative service).
- Persons formerly insured as farmers during child-raising periods.
Exempted
- Persons working in the agrarian sector if the (fiscal) ‘unit value’ (Einheitswert)1 of the agriculture (forestry) does not reach a minimum amount (or has not been defined) and if the income from the undertaking is not the main source of income.
- Leaseholders of a hunt or fishery if they do not derive their main source of income from this activity.
Voluntary insurance
- Persons with at least twelve months of mandatory insurance within the previous 24 months or at least three months of mandatory insurance (per year) in the previous five years can continue insurance on a voluntary basis (until they are mandatorily insured again or entitled to a pension).
- Possibility of retroactive insurance for periods of education.
Financing
General finances
- Mainly tax-financed out of the federal budget.
- Partly PAYG-financed from insurance contributions
Contribution rates
- Fixed (flat-rate) contribution payments (22.8%) depending on the unit value and the number of insured people.
- Only 17.0% must actually be paid by insured person; the difference to 22.8% is made up by a ‘partner benefit’ from the federal government from tax revenues.
- Possibility to opt for contributions on the basis of the declared income.
- Contribution basis is lower if more family members are insured.
Taxation of contribution payments
- Contributions are tax-deductible.
Administration
- The ‘Social Insurance Institution of the Self-Employed’ as self-administered federal pension carrier takes administrative responsibility for all affairs related to self-employed persons including farmers.
- The former ‘Social Insurance Institution for Farmers’ was merged with that for the Self-Employed in 2020.
Qualifying Conditions
Qualifying conditions
- Same as for statutory pension scheme for employees and equally treated persons.
Early retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Deferred retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Combining employment & retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Benefits
Pension benefits
- Primarily based on the insured unit value (or the declared income) and the length of insurance, including pension-credited periods of e.g. child-raising.
- No specification in law regarding fixed minimum and maximum amount of pension benefits; maximum pension benefits levelled due to contribution assessment ceiling; minimum pension benefits secured by the equalisation supplement (plus pension bonus).
Benefit calculation
- Based on the multiplication of the following factors:
- Assessment basis: insured unit value/income (contribution basis) of each calendar year (transitional provisions for insurance periods before 2005 and in particular for persons born before 1955).
- Account percentage: same as for statutory pension scheme for employees and equally treated persons (for insurance periods before 2005 an initial credit (calculated according to the former law) on the pension account was granted).
- Current pension value: same as for statutory pension scheme for employees and equally treated persons.
- Adjustments: same as for statutory pensions scheme for employees and equally treated persons.
Taxation and social security contributions
- Same as for statutory pension scheme for employees and equally treated persons.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Self-employed entrepreneurs working in the agrarian sector (e.g. farmers, foresters, winemakers, fish farmers or horticulturists) and their spouse/partner/children/parents if they work full-time in the enterprise, are at least 15 years old and are not subject to mandatory insurance in the statutory pension scheme for employees and equally treated persons.
- Persons formerly insured as farmers during military service (or alternative service).
- Persons formerly insured as farmers during child-raising periods.
Exempted
- Persons working in the agrarian sector if the (fiscal) ‘unit value’ (Einheitswert)1 of the agriculture (forestry) does not reach a minimum amount (or has not been defined) and if the income from the undertaking is not the main source of income.
- Leaseholders of a hunt or fishery if they do not derive their main source of income from this activity.
Voluntary insurance
- Persons with at least twelve months of mandatory insurance within the previous 24 months or at least three months of mandatory insurance (per year) in the previous five years can continue insurance on a voluntary basis (until they are mandatorily insured again or entitled to a pension).
- Possibility of retroactive insurance for periods of education.
General finances
- Mainly tax-financed out of the federal budget.
- Partly PAYG-financed from insurance contributions
Contribution rates
- Fixed (flat-rate) contribution payments (22.8%) depending on the unit value and the number of insured people.
- Only 17.0% must actually be paid by insured person; the difference to 22.8% is made up by a ‘partner benefit’ from the federal government from tax revenues.
- Possibility to opt for contributions on the basis of the declared income.
- Contribution basis is lower if more family members are insured.
Taxation of contribution payments
- Contributions are tax-deductible.
- The ‘Social Insurance Institution of the Self-Employed’ as self-administered federal pension carrier takes administrative responsibility for all affairs related to self-employed persons including farmers.
- The former ‘Social Insurance Institution for Farmers’ was merged with that for the Self-Employed in 2020.
Qualifying conditions
- Same as for statutory pension scheme for employees and equally treated persons.
Early retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Deferred retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Combining employment & retirement
- Same as for statutory pension scheme for employees and equally treated persons.
Pension benefits
- Primarily based on the insured unit value (or the declared income) and the length of insurance, including pension-credited periods of e.g. child-raising.
- No specification in law regarding fixed minimum and maximum amount of pension benefits; maximum pension benefits levelled due to contribution assessment ceiling; minimum pension benefits secured by the equalisation supplement (plus pension bonus).
Benefit calculation
- Based on the multiplication of the following factors:
- Assessment basis: insured unit value/income (contribution basis) of each calendar year (transitional provisions for insurance periods before 2005 and in particular for persons born before 1955).
- Account percentage: same as for statutory pension scheme for employees and equally treated persons (for insurance periods before 2005 an initial credit (calculated according to the former law) on the pension account was granted).
- Current pension value: same as for statutory pension scheme for employees and equally treated persons.
- Adjustments: same as for statutory pensions scheme for employees and equally treated persons.
Taxation and social security contributions
- Same as for statutory pension scheme for employees and equally treated persons.
1 The unit value is a value for land that is determined by a specific procedure. It is significantly below the market value.
Legal Basis: General Pension Act (Allgemeines Pensionsgesetz); Farmers' Social Security Act – First Part and Second Part, Section III (Bauern-Sozialversicherungsgesetz – Erster Teil und Zweiter Teil, Abschnitt III); Income Tax Act (Einkommensteuergesetz 1988).