Working in a partial pension

The partial pension, applicable from 1 January 2026, can generally be applied for at the Pensionsversicherungsanstalt (PVA) as the responsible pension insurance institution, and results in a reduction of working hours whilst allowing a portion of the pension to be drawn. Technically speaking, a part of the pension account is closed and paid out as a partial pension. The remainder stays open and is fed by contributions and insurance months. The aim is to enable a more flexible and gradual transition from gainful employment to retirement, depending on the individual life situation.

A key requirement for claiming a partial pension is a reduction in working hours of at least 25 % and a corresponding retirement age, which depends on the type of pension. For the old-age pension, this applies to women from the age of 61.5 (rising) and to men from the age of 65; for the heavy labour pension from the age of 60; and for the long-term insured pension and the corridor pension from the age of 62 (although for the latter, the age is currently rising to 63). However, a partial pension cannot be claimed if the person is engaged in both employed and self-employed work.

The partial pension scheme provides for the following three models - the corresponding reduction in working hours must be agreed with the employer:

• 25 % Part-time pension: working hours are reduced by 25 to 40 % – in return, you receive 25 % of pension benefits (a proportion of the total credit in the pension account) in addition to your reduced salary.
• 50 % Partial retirement: working hours are reduced by 40.01 to 60 % – in return, you receive 50 % of pension benefits (a proportion of the total credit in the pension account) in addition to your reduced salary.
• 75 % Partial pension: working hours are reduced by 60.01 to 75 % – in return, you receive 75 % of pension benefits (a proportion of the total credit in the pension account) in addition to your reduced salary.

A key advantage of partial retirement is that the later pension can be increased due to continued employment, as contributions are still being paid into the pension insurance – and the net income generally remains comparatively high during partial retirement, despite reduced hours. Partial retirement can also be taken after reaching the standard retirement age, meaning a portion of the pension account continues to be fed by contributions, thus leading to a supplementary amount to the pension after work ceases.

Please note that any increases or decreases to the partial pension correspond to those according to the pension reform. Therefore, if the partial pension is claimed before reaching the standard retirement age, reductions may occur – an increase may occur if claimed after the standard retirement age. The partial pension and income (from continued employment) are treated separately for income tax purposes. It should also be borne in mind that after the partial pension is claimed for the first time, there is no longer a claim to a long-term insured person's pension, heavy work pension, or disability or occupational incapacity pension.

Finally, it should be taken into account that the combination of partial pension and partial retirement is not possible. In general, access to partial retirement has been made more difficult by restricting the duration (gradually) to a maximum of three years before the requirements for a corridor pension are met or before reaching the regular retirement age. Previously, the entitlement to partial retirement was for a maximum of 5 years before reaching the regular retirement age.

Image: © Adobe Stock - magele-picture