CMS Expert Guide to Pensions in Austria

Austria has a three pillar system. The first pillar is financed by the state and funded through social security contributions paid by all employees on their salaries. The second pillar consists of occupational pension plans, while the third pillar covers private personal pension arrangements.

Occupational pension plans can be established either on a collective basis (usually through a pension fund for all employees or specific categories) or on an individual basis (for one or more employees by individual contract). Both types are typically set up through individual contracts with pension funds. Plans may be defined benefit or defined contribution, with hybrid schemes also existing. Defined contribution plans are now the norm.

There is no general requirement to provide supplementary pension benefits to employees. However, if a pension plan is introduced on a collective basis (e. g. as a result of collective bargaining or a works agreement), employers must contribute to it. 

A pension contract is a private law agreement between the employer and the pension fund. It is based on a works agreement between the works council and the employer but may exceptionally be based on an individual arrangement. Employees are generally bound by the terms of the employer’s general plan. Employers may also be bound by collective agreements requiring them to offer or contribute to a specific plan.

Yes. Only pension funds and certain insurance companies may act as pension providers, and they must be approved by the Austrian Financial Market Authority (FMA).

No. 

Contributions should at least cover all the costs and obligations of the fund. Employers are contractually obliged to pay their agreed contributions.

7. What age are benefits taken?

Benefits are generally taken at the statutory retirement age. The equal treatment directive applies accordingly.

It depends on the plan’s terms and may fall on the employer, the employees, or both. In practice, employers typically bear all costs.

No.

Yes, although limited tax exemptions apply, provided the contributions are paid by the employer.

No.

12. Are benefits taxed?

Yes, but pensions derived from certain tax-free contributions will also be tax-free.

Not directly, but pension fund contributions are considered operating expenses and can therefore be claimed by the company for tax purposes.

No.

The FMA reviews how pension providers behave both in the financial markets and in relation to their members. Its main tasks include reviewing the plans, policies and solvency of pension providers. The FMA has extensive powers and may, for instance, approve the business plan of each pension fund and examine the annual financial statements of pension providers.

Pension funds are subject to statutory notification, reporting and submission requirements towards the FMA.

Insolvency applications may only be filed by the FMA. The assets assigned to an assessment and risk pool form a special fund. In addition to the insolvency administrator, a trustee must be appointed.

Yes. There is extensive legislation prohibiting discrimination on the grounds of race or ethnic origin, gender, religion or belief, disability, age or sexual orientation. The Act on Temporary Agency Work also prohibits discrimination against temporary agency workers in the user undertaking if the workers have been employed there for more than four years.

Yes. After the expiry of an agreed qualifying period (up to a maximum of five years), an employee’s deferred benefits become fully vested.

Unions play an important role, particularly in negotiating collective bargaining agreements, which may provide for occupational pensions. The same applies to the negotiation of works agreements.

Yes. Employee representatives are present on the boards of occupational pension funds but not on those of insurance companies acting as pension providers.

Yes, but there are legal restrictions, including a requirement to obtain a licence from the FMA.

Yes. There are restrictions on members switching between plans. If an employer wishes to transfer members without their consent or without the consent of the works council, further restrictions apply. The general principle is that an employee’s acquired pension rights must be preserved unless the transfer is made on certain specific grounds.