pensions For Members

EXPLAINED: How do employer top-ups to my pension work in Austria?

Aaron Burnett
Aaron Burnett - [email protected]
EXPLAINED: How do employer top-ups to my pension work in Austria?
Austrian social insurance is a huge cost for freelancers, but it does go to your state pension later. Photo: Pixabay

Austria’s pension system rests on three pillars – a state pension, anything private you've set up for yourself, and extra contributions your employer might make as part of your company savings plan. Here’s how it works if your workplace is topping up your pension.


If you’re looking at taking a job in Austria, one of the benefit schemes to look into is the degree to which your would-be employer will top up your pension.

So called “occupational pensions” are an important element of Austria’s “three-pillar” pension system.

The first pillar – or a state pension – is financed mainly through mandatory joint employer and employee contributions that automatically come off your payslip every month. If you’ve worked in Austria for at least ten years, you’re entitled to one once you reach retirement age.

The third pillar is entirely privately financed if someone chooses to put away extra money through such a fund.

The second pillar though – or extra employer contributions to an occupational pension – can both provide you with more in your nest egg and some attractive tax benefits.

READ ALSO: EXPLAINED: How does the Austrian pension system work?


How common is occupational pension insurance in Austria? How does it work?

About 25 percent of people working in Austria currently contribute to an occupational pension scheme – on top of what they pay into their state pension and alongside any private pension provision they may have.

In these arrangements, employers typically make extra pension contributions into an account with an established pension insurance fund. In Austria, there are eight such funds. Five have multiple companies as contributors. Three have large single companies as contributors. The employer pays into the employee’s pension account with this fund until the employee either retires or leaves the company.

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Around 25 percent of people working in Austria make pension contributions on top of their state pension, through company plans. Photo: Markus Spikse/Unsplash

Almost all large companies in Austria have a relationship with one of these pension funds, although many Austrian SMEs are increasingly coming onboard as well – and offering their employees the potential benefits.

READ ALSO: How many years do I have to work in Austria to be entitled to a pension?

How much will the employer top my pension up by?

This varies.

That’s because management will typically agree to the terms of occupational pension contributions with the employee works council via a collective agreement – which requires both sides to negotiate and agree on the terms, including contribution amounts.

If the company doesn’t have a works council, management typically negotiates these terms with each employee individually. The company then in turn makes an agreement with the pension fund. Any agreement between a pension fund and an Austrian company must also, by law, have a provision for what happens to the dependents of an occupational pension recipient – for example, if partners are entitled to a widow’s pension.


READ ALSO: Why only a quarter of Austrians trust the pension system

Are there tax benefits for me?

Employees also have the option of making an additional contribution on top of that made by their employers, typically to a maximum of €1,000 a year.

If you choose to do this, any income you draw from your own contributions to occupational pension insurance will be completely tax-free.

What happens if and when I leave the company?

If the employee leaves the company before they’ve contributed €12,600, they can opt to have their contributions paid out as a lump sum. Otherwise, they can opt to get a top-up to their state pension when they retire, proportionate to the capital they put in.

There are a few other options too. You can request the scheme to continue while paying your own contributions. You might do this if your new employer doesn’t have an occupational pension plan.

You can also request your contributions be transferred abroad to a pension scheme in a new country – for example if you take up a job somewhere else.

READ ALSO: Do your pension contributions abroad count in Austria?



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