Partial retirement (Altersteilzeit) has become more complicated in Austria in 2026.The subsidized reduction in working hours can still facilitate a gradual transition into retirement, but the rules are changing in stages. For agreements starting in 2026, a shorter maximum duration applies than before. Furthermore, new thresholds for employment periods subject to unemployment insurance have been in effect since July 1st.
For employees, it is therefore not just a question of whether reduced working hours are possible in principle. The decisive factors are the correct start date, the model, previous insurance periods, potential secondary employment, and the written agreement with the employer. This overview explains the most important points for Austria and shows which questions should be clarified before submitting an application.
Note: The requirements depend on the personal pension reference date, the model, and the specific agreement. For a binding assessment, the AMS (Public Employment Service), the Chamber of Labour (Arbeiterkammer), the pension insurance institution, or the responsible HR department are the correct points of contact.
What is changing for partial retirement in 2026
Statutory partial retirement is an agreement between employee and employer. Working hours are reduced, current income is supplemented by a wage compensation, and the AMS reimburses the employer for a portion of the additional costs under certain conditions. The subsidy is therefore not automatically an individual pension, but is tied to labor and social law conditions.
The most important change concerns the subsidized duration of continuous partial retirement. According to the information on oesterreich.gv.at, the following transition limits apply:
- If the agreement begins in 2026, partial retirement pay is possible for at most four and a half years.
- If it begins in 2027, the maximum duration drops to four years.
- If starting in 2028, at most three and a half years are planned.
- From 2029, the maximum subsidized duration is generally three years.
Even the earliest possible entry is changing. During the transition period, continuous partial retirement can generally still begin earlier than the statutory retirement age. From 2029, access will be more tightly linked to three years before the statutory retirement age or to the conditions for a corridor pension. For women, the gradually rising statutory retirement age must also be taken into account.
Why the start date in July 2026 is important
For the required employment period subject to unemployment insurance contributions, the start date of the agreement counts. The previous threshold of 780 weeks will be gradually increased until the end of 2028. According to the current overview of the ",Austrian Economic Chambers gelten für kontinuierliche Vereinbarungen unter anderem folgende Stufen:
- Start after 31 March 2026: 796 weeks
- Start after 30 June 2026: 804 weeks
- Start after 30 September 2026: 812 weeks
- Start after 31 December 2026: 820 weeks
- From 2029: 884 weeks, i.e. 17 years
Anyone who begins a new agreement in July 2026 must therefore already reckon with the threshold of 804 weeks. These are not simply 15 or 17 calendar years, because individual periods can be evaluated differently. The reference period is generally 25 years; certain childcare periods and periods of self-employment can influence the assessment. A separate inquiry of the insurance record is therefore more sensible than a rough calendar calculation.
Continuous model or block time?
In the continuous phased-retirement model, working hours are reduced for the entire duration. For example, someone who previously worked 40 hours can permanently lower their weekly hours and receives a legally mandated wage compensation for the loss of income. The exact amount depends on the extent of the reduction and the legal requirements.
Under the block-time model, the reduced working time is first worked in. In a later leisure phase the accrued time is used. A simple example would be an agreement in which work continues initially and is followed by a longer paid leisure period. This model can be attractive for employees, but it is less strongly supported by subsidies for employers than the continuous variant.
The Austrian Chamber of Labour weist darauf, dass eine geblockte Altersteilzeit unter den Übergangsregeln weiterhin länger laufen kann. For employers, however, the subsidy for the block model decreases stepwise. According to the current WKO overview, the cost reimbursement for agreements with a start date in 2026 is 27.5 percent, 20 percent in 2027 and ten percent in 2028. From 2029 there is no corresponding subsidy for newly starting block-time agreements.
Observe the ban on secondary employment as of 1 July
A particularly important change concerns additional employments. For phased retirement agreements that begin on 1 January 2026, secondary employment with other employers is generally no longer permitted. This also applies to marginal jobs. The transitional period for certain existing employments ended on 30 June 2026.
An exception may apply if the secondary employment was regularly carried out for at least four weeks in the last year before commencing the phased retirement. Self-employed activities generally remain possible according to the published information, but not with the phased-retirement employer. Whether the specific activity falls under an exception should be checked in writing before it begins.
The WKO information sheet on the changes as of 1 July 2026 beschreibt die Übergangsbestimmungen. Auch die AK information on partial retirement empfiehlt, Nebenbeschäftigungen nicht nur nach dem Umfang, sondern auch nach dem Zeitpunkt und der rechtlichen Form zu beurteilen.
What requirements employees should check
Before speaking with their employer, employees should gather the most important basic data. This includes the date of birth, the expected standard pension reference date, any entitlement to a corridor pension and the insurance record. The current extent of employment is also relevant. For subsidized continuous phased retirement, the previous working hours generally must not be more than 40 percent below the statutory or collectively agreed normal working time.
After that, the desired reduction should be planned realistically. Phased retirement is not a blanket halving of pay for half the work. In addition to the reduced pay, wage compensation, social insurance, additional payments, the collective agreement and the concrete design of working time all interact. Anyone who needs reliable household budgeting should have the expected amounts calculated in writing before signing.
These additional questions are important:
- Does the agreement still start in 2026 and what maximum duration then applies?
- Do I meet the required number of insurance weeks at the actual start of the term?
- Will working time be reduced continuously or organized as a block model?
- What secondary jobs or self-employed activities do I currently have?
- How are vacation, special payments, severance pay, and overtime handled?
- What happens if the pension reference date or personal planning changes?
What employers and HR departments need to prepare
For employers, partial retirement is not just a matter of payroll accounting. Before reaching an agreement, personnel requirements, knowledge transfer, substitution, and the subsequent transition to retirement must be planned. This is especially true in small businesses, where reduced working hours have an immediate impact on the distribution of tasks.
The HR department should first clarify whether the specific employee meets the eligibility requirements for funding. Afterwards, the model, weekly hours, duration, wage compensation, vacation processing, and the application to the AMS must all align. The AMS FAQ on partial retirement explain, among other things, the difference between continuous and blocked working time and point out that overtime exceeding the marginal employment threshold can be problematic.
The need for replacement should also not be underestimated. With the continuous model, a replacement or internal redistribution may be necessary throughout the entire duration. A good agreement therefore not only records the hours, but also handovers, responsibilities, and how to deal with changes in the company.
Partial retirement is not the same as partial pension
Since 1 January 2026 there has also been the partial pension. It allows, under certain conditions, a reduction of working hours while simultaneously receiving part of the pension. Partial retirement (Altersteilzeit) and the partial pension are, however, different schemes and cannot be drawn at the same time.
For the decision, the goal is therefore decisive: should a subsidized working-time agreement with wage compensation be planned until a transition to a pension, or is there already an entitlement to a pension and should working hours be gradually reduced afterwards? The pension insurance, AMS and the Chamber of Labour can compare the options based on the individual’s insurance record.
Checklist for the discussion about partial retirement
- Determine the effective date: Record the standard retirement age, corridor pension, and desired start date in writing.
- Check insurance periods: Obtain the insurance record and compare the number of weeks that apply to the start date.
- Select model: Compare continuous partial retirement and the block-time model with regard to income, free time, and business operations.
- Disclose secondary employment: Dienstverhältnisse, geringfügige Jobs und Selbstständigkeit vorab prüfen lassen.
- Calculate finances: Entgelt, Lohnausgleich, Sozialversicherung, Sonderzahlungen und Abfertigungsfolgen dokumentieren.
- Agree in writing: Arbeitszeit, Laufzeit, Urlaub, Übergabe, Mehrarbeit und den Umgang mit Änderungen eindeutig festhalten.
- Secure funding: Die Antragsschritte mit AMS oder Personalstelle klären, bevor die Arbeitszeit tatsächlich reduziert wird.
Conclusion: In 2026, the exact plan matters
Phased retirement remains a possible way in Austria to make the transition into retirement more predictable. However, several details will be crucial in 2026: the maximum continuous duration will drop to four and a half years, the required insurance period will increase to 804 weeks from July, and additional employment must be scrutinized especially carefully.
Those considering phased retirement should therefore not just look for a blank form. A joint discussion with the employer, the AMS and an advisory service is preferable. Check the start date, the model, the insurance record and the financial implications before signing a binding agreement.
Weiterführende Informationen
On jobspot.at you will find additional information on Jobs and applications from age 50, about Part-time employment and to Collective agreement before making a job decision.
