Supplementary Pension Schemes for Public Service Employees

Mandatory insurance¹

• Public service employees (incl. persons in vocational training); based on collective agreements.

Opting out

• Certain groups of public service employees can opt out upon request (e.g. public employees who do scientific work at universities or research institutions with fixed-term employment contracts during which they are unable to complete the minimum insurance period).

Voluntary insurance

• Formerly mandatorily insured persons can request to continue insurance on voluntary basis.
• Voluntary insurance in extra supplementary fully funded scheme available to all public service employees (for details see occupational pension schemes).

General finances

• Financing mechanisms vary between pension schemes: either PAYG or mix of PAYG and funded schemes financed from mandatory insurance contributions and capital revenues.

Contribution rates to mandatory insurance

• Fixed share of income subject to supplementary pension payments (capped by max. amount).
• Contributions paid by employer (higher share) and employee (lower share); shares differ by schemes and financing mechanism.

Taxation of contribution payments

• Rules for taxation of mandatory insurance contributions (employer/employee) are complex and vary with financing mechanism (PAYG-/capital-funded).

• Supplementary pension carriers administer the schemes; the largest being the VBL.
• The ‘Federal Ministry of Finances’ oversees the mandatory insurance scheme of the VBL.
• The ‘Federal Financial Supervisory Authority’ oversees the voluntary insurance scheme of the VBL.

• Based on entitlement to full old age pension from statutory old age pensions scheme with a minimum insurance period of 60 months.

Pension benefits

• Primarily based on the amount of contributory earnings, length of contribution period and capital revenues.
• If minimum insurance period is not fulfilled, persons can request lump sum payment of personal contributions until age 69 (minus administrative costs).

Factors for benefit calculation

• Based on the multiplication of the following factors:
• Pension points (per year): relate to the insured income for each calendar year, divided by a referential income (determined by social partners), multiplied by age factor adjusting for life expectancy and expected revenues before and during retirement.
• Bonus points: based on (fictitious) capital revenues.
• Pension value: based on mathematical insurance calculation.
• Adjustments: pensions increase by 1% per year.

Taxation and social security contributions

• Pension benefits are subject to income tax, if insurance contributions were tax-exempted; if contributions were subject to income tax, fixed share of pension benefits (minus contribution payments) are subject to income tax (share dependent on age of retirement).
• Pension payments (> EUR 159.25, adjusted yearly) are subject to mandatory health insurance; pension payments (if exceeding min. amount) are fully subject to long-term care insurance (paid in full by retired person).