€1,250 allowance per month, no more pension contributions for employees – and new duties for employers. What you need to know now.
What the Active Pension brings
- Legal basis: BGBl. I No. 88/2026 (Federal Law Gazette), issued on 16 October 2026. Applies from 1 January 2027.
- Who is affected: Everyone who keeps working after the standard retirement age – without a pension, alongside a pension or on a partial pension.
- Two levers: The employee contribution to pension insurance is abolished. In addition there is an activity allowance of up to €1,250 per month.
Earnings alongside the old-age pension remain unlimited.
What changes from 2027
- Employees: The PV (pension insurance) employee share of 10.25 % is abolished in full from the first day of the month after the standard retirement age. The employer share of 12.55 % remains.
- Self-employed: The pension contribution falls to 10.18 % (GSVG, Austrian Social Insurance Act for the Self-Employed), 11.01 % (FSVG, Austrian Social Insurance Act for Freelancers) and 9.36 % (BSVG, Austrian Social Insurance Act for Farmers) respectively.
- Supplementary insurance: From 2027, contributions paid alongside a pension in payment no longer increase the pension.
Before the standard retirement age – corridor pension, pension for arduous work, pension for long-term insured persons – there is no relief.
The new activity allowance (§ 105a EStG, Austrian Income Tax Act)
€1,250 per month – maximum €15,000 per year
- Eligible: Income from active gainful employment, both employed and self-employed.
- Not eligible: 13th/14th salary payments, allowances under § 68 EStG, rental income from the former business, capitalist co-entrepreneurs.
- Implementation: Employees submit form E 35 together with supporting evidence, and the employer reduces the wage tax base. Self-employed persons use their tax return.
Who is eligible?
- Deferred pension: no minimum insurance period – allowance from the first day of the month after the standard retirement age.
- Earnings alongside the pension: men 480, women 408 insurance months at the start of the pension – for women, rising by 12 per year from 2028 to 480 from 2033.
- Partial pension: no minimum insurance period for the duration of the partial pension (ASVG, General Social Insurance Act, only).
Missing months? Buy back school and study periods (2026: €1,580.04 per month) – application before the pension reference date.
Three routes from the standard retirement age
Deferred pension
Pension later, but +0.425 % per month (max. 15.3 %). Allowance without a minimum insurance period. Drawback: no pension in payment during the deferral.
Earnings alongside the pension
Pension immediately and in full, unlimited additional earnings. Allowance only with 480/408 insurance months. No transport tax credit, no €620 allowance.
Partial pension
25/50/75 % of the pension immediately, working time reduced by 25–75 %. Allowance without a minimum insurance period. ASVG only.
Common to all three: no more PV employee share.
Is it worth continuing to work? Worked example: deferral
Mr D. reaches the standard retirement age in 2027, with a pension entitlement of around €3,714 gross. He defers for two years, with a contribution base of €5,000.
- Plus: Lifelong pension of around €4,289 gross – an increase of €575 per month.
- Plus: Around €512 per month saved in PV share, plus an activity allowance totalling €30,000.
- Minus: 24 months without a pension – around €104,000 gross forgone (14 payments per year, incl. special payments).
Simplified break-even: around 13 years. It cannot be done without an individual comparative calculation.
What employers must do now
- Record employees aged 60 and over and obtain an insurance record extract or a confirmation of the pension reference date.
- The AV/IE contribution (unemployment insurance / insolvency remuneration fund) is waived only from the individual entitlement to a corridor or standard pension – no longer across the board from age 63.
- Add form E 35 with supporting evidence to the payroll account; take the allowance into account from January 2027.
- The DB/DZ exemption (employer contribution to the Family Burdens Equalisation Fund / surcharge) from age 60 applies only until 31 December 2027; from 2028, DB of 2.7 % for everyone.
- Review partial retirement for older employees (Altersteilzeit): the maximum duration falls from 4.5 to 3 years, depending on the start date.
Conclusion
Continuing to work becomes more attractive – but not automatically the right choice. Deferral, earnings alongside the pension or partial pension: only a comparative calculation shows which route fits. And employers must switch their payroll over from January 2027.
As at: October 2026, BGBl. I No. 88/2026.