Altered Working Time Scheme Reform 2026: Key Changes at a Glance
ServicesOutsourcingHR & PayrollPayroll Newsletter Newsletter November 2025
Partial Retirement Reform 2026
What needs to be considered for partial retirement as of January 1, 2026 is shown in the following “quick check”:
- Shortened funding period (§ 27 (2) AlVG)
- Applies to continuous partial retirement arrangements starting on or after January 1, 2026: The maximum funded duration of partial retirement will be gradually reduced from five to three years (2026: 4.5 years, 2027: 4 years, 2028: 3.5 years, from 2029: 3 years). During the transition phase (January 1, 2026 to December 31, 2028), partial retirement can still begin up to five years before reaching the statutory retirement age, but the AMS will only grant partial retirement benefits for the respective shortened duration.
- Longer prior employment required (§ 82 (8) AlVG)
- Applies to continuous partial retirement arrangements starting on or after January 1, 2026: The required periods of employment subject to unemployment insurance within the last 25 years before the start of partial retirement will gradually increase from 780 to 884 weeks by 2029 (i.e., from 15 to 17 years).
- New “upper value” calculation logic for wage compensation (§ 27 (2) item 3 lit. a AlVG)
- Applies to continuous partial retirement arrangements starting on or after January 1, 2026: Similar to the calculation of the lower value, overtime and collectively agreed extra hours may no longer be included when determining the upper value. For all-in salaries, the AMS considers that the included overtime and collectively agreed extra hours must be calculated out. Additional hours for part-time work will, in all likelihood, be considered (but probably without part-time overtime surcharges—clarifications from the AMS on this point are still pending).
- Reduction of AMS replacement rate (§ 27 (5) AlVG)
- Applies to continuous partial retirement arrangements starting on or after January 1, 2026: The AMS replacement rate (partial retirement benefit) will uniformly amount to 80%. From the calendar year 2029, the AMS replacement rate is expected to be raised back to 90%.
- Prohibition of secondary employment (§ 28 (2) AlVG)
- While the above-mentioned deteriorations only affect continuous partial retirement agreements starting on or after January 1, 2026, as of January 1, 2026 all partial retirement arrangements (including block models), regardless of start date, will be subject to a strict prohibition on secondary employment.
- Secondary jobs with other employers (including marginal employment) during partial retirement from January 1, 2026 will only be permitted if they were regularly performed in the year prior to the start of partial retirement (for at least 28 days/year). If this requirement is not met, holding another job with other employers will result in:
- the employer not receiving partial retirement benefits from the AMS for the relevant months,
- the employee losing entitlement to wage compensation,
- the secured social security contribution basis pursuant to § 44 (1) item 10 ASVG becoming invalid, and
- corresponding reversals (repayments and recalculations) being carried out.
- For partial retirement arrangements already in progress, a transitional period applies (six-month “tolerance period”): Unauthorized secondary jobs (i.e., if they were not performed for at least 28 days in the year prior to the start of partial retirement) must be terminated by June 30, 2026; otherwise, as of July 1, 2026, partial retirement benefits, wage compensation, and the secured social security contribution basis pursuant to § 44 (1) item 10 ASVG will cease!