Statutory Pension Scheme for Employees and Equally Treated Persons
Pensionsversicherung nach dem Allgemeinen Sozialversicherungsgesetz
Coverage
Mandatory insurance
- Employees (incl. apprentices and contractual employees in the public sector).
- Equally treated groups, especially freelancers working primarily for a single client without having employees of their own.
- Persons performing their military service (or alternative service).
- Specific groups of economically inactive persons, such as parents during child-raising periods; claimants of income replacement benefits incl. recipients of sickness benefits, invalidity benefits or unemployment benefits.
Opting out
- Not possible.
Exempted
- Civil servants.
- Marginally employed persons.
- Some other groups (e.g. priests or members of the orders and congregations of the Catholic Church or the institutions of the Protestant Diaconia; employed lawyers incl. trainee lawyers and candidates for the notary's office with regard to their inclusion in the pension schemes of the professional chamber, see old age pension scheme for attorneys and the statutory old age pension scheme for notaries).
Voluntary insurance
- Persons not mandatorily insured in the statutory old age pension scheme and of at least 15 years of age.
- 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.
- Special provisions for marginally employed persons and home caregivers.
Financing
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general federal budget.
Contribution rates to mandatory insurance
- Fixed share of monthly gross earnings (22.8%) with contribution assessment ceiling (Höchstbeitragsgrundlage).
- Contributions shared between employer (12.55%) and employee (10.25%).
- Special provisions for contribution payments (rates and/or modalities) apply to distinct occupational groups (e.g. insured economically inactive persons).
- Insured persons can voluntarily choose to pay higher contributions.
Contribution rates to voluntary insurance
- Fixed contribution rate (22.8%).
- Different contribution bases (depending on whether former mandatory insurance is continued or not).
- Special conditions (lower contributions) for marginally employed persons.
- Free insurance for home caregivers under certain conditions (contributions paid by the federal government).
- Insured persons can voluntarily choose to pay higher contributions.
Taxation of contribution payments
- Contributions are tax-deductible.
Administration
- The ‘Federal Pension Insurance Institution’ (Pensionsversicherungsanstalt) as a self-administered federal pension carrier takes administrative responsibility for all affairs related to the scheme.
Qualifying Conditions
Qualifying conditions
- Standard old age pension: statutory retirement age is 65 for men and 60 for women; from 2024 on, women’s retirement age will be gradually raised to 65 until 2033.
- Minimum insurance period: 15 years (comprising at least 7 years of employment).
Early retirement
- Corridor pension: possibility of retirement at 62 in case of an insurance period of at least 40 years (Korridorpension).
- Heavy labour pension: possibility of retirement at 60 in case of an insurance period of 45 years, including 10 years of heavy labour within the last 20 years (Schwerarbeitspension).
- Severe disability pension: possibility of early retirement at any age if severe and permanent invalidity has occurred with minimum insurance period of 5 years (Invaliditäts-, Berufsunfähigkeits- und Erwerbsunfähigkeitspension).
- Negative (permanent) adjustments to pension benefits in case of early retirement: corridor pension: 5.1% per year, max. 15.3%; heavy work pension: 1.8% per year, max. 9%; severe disability pension: 4.2% per year, max. 13.8%.
Deferred retirement
- Retirement can be deferred with positive (permanent) adjustments to pension benefits (4.2% per year).
Combining employment & retirement
- Termination of employment is not a precondition for claiming old age pension benefits.
- After reaching the statutory retirement age employment is permitted without earnings limit; income ceilings apply to retired persons below the standard statutory retirement age (with options for ‘partial’ old age pensions in some cases).
- Reduction of contribution if person continues working after reaching statutory retirement age.
Benefits
Pension benefits
- Primarily based on the amount of the insured income and the insurance period, 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/equalisation supplement bonus).
Benefit calculation
- Based on multiplication of the following factors:
- Assessment basis: insured income (total of the monthly contribution basis) of each calendar year (transitional provisions for insurance periods before 2005 and in particular for persons born before 1955).
- Account percentage: 1.78% are credited to the pension account as partial credit; the partial credits of previous years are revalued and added up; the sum is the total credit.
- For insurance periods before 2005 an initial credit (calculated according to the former law) on the pension account was granted.
- Current pension value: the pension entitlement at the standard retirement age is calculated by dividing the total credit of the benefit by 14 (plus/minus adjustments for deferred or early retirement).
- Adjustments: annual adjustment of the pension value, taking into account changes in prices/incomes (inflation rate); typically a special law provides for a different adjustment depending on the pension level.
Taxation and social security contributions
- Pension benefits are subject to income tax according to the general tax rules.
- Mandatory contributions for health insurance (5.1%) are deducted monthly from the pension total.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Employees (incl. apprentices and contractual employees in the public sector).
- Equally treated groups, especially freelancers working primarily for a single client without having employees of their own.
- Persons performing their military service (or alternative service).
- Specific groups of economically inactive persons, such as parents during child-raising periods; claimants of income replacement benefits incl. recipients of sickness benefits, invalidity benefits or unemployment benefits.
Opting out
- Not possible.
Exempted
- Civil servants.
- Marginally employed persons.
- Some other groups (e.g. priests or members of the orders and congregations of the Catholic Church or the institutions of the Protestant Diaconia; employed lawyers incl. trainee lawyers and candidates for the notary's office with regard to their inclusion in the pension schemes of the professional chamber, see old age pension scheme for attorneys and the statutory old age pension scheme for notaries).
Voluntary insurance
- Persons not mandatorily insured in the statutory old age pension scheme and of at least 15 years of age.
- 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.
- Special provisions for marginally employed persons and home caregivers.
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general federal budget.
Contribution rates to mandatory insurance
- Fixed share of monthly gross earnings (22.8%) with contribution assessment ceiling (Höchstbeitragsgrundlage).
- Contributions shared between employer (12.55%) and employee (10.25%).
- Special provisions for contribution payments (rates and/or modalities) apply to distinct occupational groups (e.g. insured economically inactive persons).
- Insured persons can voluntarily choose to pay higher contributions.
Contribution rates to voluntary insurance
- Fixed contribution rate (22.8%).
- Different contribution bases (depending on whether former mandatory insurance is continued or not).
- Special conditions (lower contributions) for marginally employed persons.
- Free insurance for home caregivers under certain conditions (contributions paid by the federal government).
- Insured persons can voluntarily choose to pay higher contributions.
Taxation of contribution payments
- Contributions are tax-deductible.
- The ‘Federal Pension Insurance Institution’ (Pensionsversicherungsanstalt) as a self-administered federal pension carrier takes administrative responsibility for all affairs related to the scheme.
Qualifying conditions
- Standard old age pension: statutory retirement age is 65 for men and 60 for women; from 2024 on, women’s retirement age will be gradually raised to 65 until 2033.
- Minimum insurance period: 15 years (comprising at least 7 years of employment).
Early retirement
- Corridor pension: possibility of retirement at 62 in case of an insurance period of at least 40 years (Korridorpension).
- Heavy labour pension: possibility of retirement at 60 in case of an insurance period of 45 years, including 10 years of heavy labour within the last 20 years (Schwerarbeitspension).
- Severe disability pension: possibility of early retirement at any age if severe and permanent invalidity has occurred with minimum insurance period of 5 years (Invaliditäts-, Berufsunfähigkeits- und Erwerbsunfähigkeitspension).
- Negative (permanent) adjustments to pension benefits in case of early retirement: corridor pension: 5.1% per year, max. 15.3%; heavy work pension: 1.8% per year, max. 9%; severe disability pension: 4.2% per year, max. 13.8%.
Deferred retirement
- Retirement can be deferred with positive (permanent) adjustments to pension benefits (4.2% per year).
Combining employment & retirement
- Termination of employment is not a precondition for claiming old age pension benefits.
- After reaching the statutory retirement age employment is permitted without earnings limit; income ceilings apply to retired persons below the standard statutory retirement age (with options for ‘partial’ old age pensions in some cases).
- Reduction of contribution if person continues working after reaching statutory retirement age.
Pension benefits
- Primarily based on the amount of the insured income and the insurance period, 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/equalisation supplement bonus).
Benefit calculation
- Based on multiplication of the following factors:
- Assessment basis: insured income (total of the monthly contribution basis) of each calendar year (transitional provisions for insurance periods before 2005 and in particular for persons born before 1955).
- Account percentage: 1.78% are credited to the pension account as partial credit; the partial credits of previous years are revalued and added up; the sum is the total credit.
- For insurance periods before 2005 an initial credit (calculated according to the former law) on the pension account was granted.
- Current pension value: the pension entitlement at the standard retirement age is calculated by dividing the total credit of the benefit by 14 (plus/minus adjustments for deferred or early retirement).
- Adjustments: annual adjustment of the pension value, taking into account changes in prices/incomes (inflation rate); typically a special law provides for a different adjustment depending on the pension level.
Taxation and social security contributions
- Pension benefits are subject to income tax according to the general tax rules.
- Mandatory contributions for health insurance (5.1%) are deducted monthly from the pension total.
Legal Basis: General Pension Act (Allgemeines Pensionsgesetz); General Social Security Act – First Part and Fourth Part, Section V (Allgemeines Sozialversicherungsgesetz – Erster Teil und Vierter Teil, V. Abschnitt); Income Tax Act (Einkommensteuergesetz 1988).