Individual Pension Schemes

Voluntary participation

• Individual pensions can be arranged for as voluntary pension insurance or by signing a long-term savings contract.
• Individual pension insurance may be taken out by the insured person or by the insured person’s spouse or employer; a long-term savings contract can be signed only by a natural person.

General finances

• Fully funded and financed by contribution payments and capital revenues.

Contribution rates

• A person may annually deduct premiums for voluntary pension insurance in the amount of EUR 5,000.

State support

• Contributions are tax-deductible, if pension plans adhere to the qualifying conditions specified in the income tax legislation.

• Life insurance companies and banks provide individual pension savings products.
• The ‘Financial Supervisory Authority’ supervises providers.

• For pension plans with tax-deductible contribution payments: the retirement age is determined in the income tax legislation for tax deductibility and is the same as the age at which the cohort’s obligation for mandatory insurance in the statutory pension schemes ends. It is 70 years of age for persons born after 1961.
• There are transition regulations for contracts signed before 2013 which allow tax deductibility for insurance contributions for retirement at age 60 or 55.
• Individual pension insurance can be drawn early in case of disability or long-term unemployment.

Pension payments

• The insurance can be agreed to be either a fixed-term or a lifelong insurance. The majority are fixed-term.
• The deductibility of insurance contributions is conditional upon the agreement to pay the pension for at least 10 years or during the life of the beneficiary.
• Individual pension insurance may be interest rate-linked or investment-linked.
• Defined contribution (DC) benefits.
• Usually, the insurance contract also includes life insurance provision for the event of the death of the insured person. In that case, the insurance savings are paid in predetermined parts to the insured person’s beneficiaries.

Taxation and social security contributions

• Benefits based on contracts made after 06/05/2004 are taxed as capital income; transitional rules for older contracts.
• Benefits are not subject to social security contributions.