Austria is preparing a major change aimed at encouraging people to continue working even after they become eligible for retirement.

Those who reach the statutory retirement age could, from 2027, have significantly more favorable conditions if they decide to keep working. According to information from the Austrian parliament, the proposal passed the Committee on Labor and Social Affairs on September 9, and provides for a tax-free amount of up to 1,250 euros per month, or 15,000 euros per year.

Relief also for those already receiving a pension

The new benefit should also apply to people who postpone retirement and continue working at their current job, as well as to those who are already receiving a pension and also work in addition to it. It does not matter whether the person works for an employer or as a self-employed worker. This means that part of the income from work after reaching the statutory retirement age would be exempt from tax up to the prescribed amount.

However, for people who are already receiving a pension, there is an important condition. To use the tax benefit, they will generally have to have at least 40 years of insurance before retirement. For women, a transitional period is предусмотрено starting with 34 years of insurance, while people who are already retired will be able to reach the required number of years by continuing to work.

Higher earnings now, but without an additional pension increase

Another important change concerns contributions. People who continue working after reaching the statutory retirement age would no longer pay their share of pension insurance contributions, which would leave them with more money from their salary. Employers would still have to pay their share of contributions, but in return the current additional pension increase that a person could achieve by continuing to work would be abolished.

The reason for such a change is primarily the situation on the Austrian labor market and the aging of the population. The government wants to increase the number of older people who remain employed and keep their experience and knowledge in the labor market longer. Official documents also mention the need to preserve the sustainability of the pension system under demographic changes, so the state is trying to make work after retirement age more financially attractive.

The proposal has not yet been finally adopted

The package received the support of the ruling parties in the parliamentary committee, but the procedure is not yet complete. The Austrian National Council still has to vote on it, and according to information from parliament, a decision could be made during September. Part of the opposition warns that the rules are too complex, while the Greens believe that such a system could unfairly favor employed pensioners compared with other workers with the same income.

If the proposal is finally adopted, the new rules should apply from the beginning of 2027. For people who can and want to continue working after reaching retirement age, this could mean noticeably higher net earnings, primarily because of the tax relief and the abolition of their share of pension contributions. On the other hand, continuing to work would no longer bring an additional increase in the pension itself, so everyone will have to assess whether higher earnings immediately are worth more to them or whether the previous model would be more favorable in the long term.