The Austrian National Council has approved proposed reforms to the occupational pension system that aim to strengthen workplace schemes as a supplement to the state pension.

The amendments, put forward by the government, look to make it easier for savers to access pension fund solutions, introduce a new severance pay scheme, and provide additional incentives to make personal contributions to workplace pensions.

From 2028, all employees will potentially gain access to a pension fund where they can transfer their accrued severance pay entitlements free of charge.

This aims to give those who do not have a workplace pension scheme the opportunity for tax-free supplementary pensions, even if they do not have an employer-provided pension scheme.

The reforms also enable the investment of mandatory contributions to workplace pension schemes in an investment pool, aiming to improve returns for savers.

This investment pool, the pension investment community (VVG), can offer higher long-term return potential but the money is tied up for longer and invested without a capital guarantee.

Meanwhile, tax incentives and greater flexibility on the payout of voluntary contributions have been approved to make personal contributions within a workplace scheme more attractive.

The reforms have been proposed to take effect from 2028 onwards.

“This reform is an important first step towards a supplementary pension for everyone,” said VBV Group CEO, Andreas Zakostelsky.

“It opens access to the pension fund also for people whose employers have not previously offered a corresponding solution.

“This significantly strengthens company-sponsored supplementary pensions as a complement to the state pension.”

VBV Pension Fund CEO, Christian Reiss, added: “For eligible individuals, concrete improvements will come from 2028: more flexible investment options – the prudent person principle – will open up additional long-term return opportunities with the new severance pay scheme.

“At the same time, everyone will be able to use their severance pay balance for a lifelong supplementary pension. And those already receiving a supplementary pension from their employer can significantly increase it through their own contributions.

“This will make access to a company pension in Austria considerably easier.”

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