Pensions

Introduction

Austria and the United Kingdom both have state pension systems that are based around contributions and qualifying years, with a state pension being paid out from retirement age. If you have worked in both the Austria and the UK it is highly feasible that you would receive state pensions from both countries (unfortunately both taxable) This Financial Bootcamp page is intended to provide an overview of the different state pensions systems and how you could potentially maximise your UK state pension and also to help qualify for an Austrian State pension. It is intended to help individuals moving or who have already moved from the UK to Austria, who have not reached retirement age in either county.

Summary of Austrian and UK State Pension Systems

The table below provides a summary of the state pension systems in both countries.

Country	Retirement Age*	Min. Qualifying Years	Amount
Austria	65 (male), 60 (female)	15	If a worker pays into their pension for 45 years then they can receive up to 80% of their average lifetime income while retired. This is referred to as the 45 – 65 – 80 rule
United Kingdom	66 (male and female)	10	Up to £179.60 per week depending on qualifying years.

* The UK state pension ages change to 67 in 2028 and there are on-going discussions on changing this to 68. Austria is looking to harmonize retirement ages for men and women within the next decade. It is also possible to check what your UK state pension age will be.

Checking & Maximising Your UK State Pension

The UK has the possibility to check your UK state pension forecast. While you need a minimum of 10 qualifying years to receive a UK state pension, to receive a full UK state pension you need a minimum of 35 qualifying years. It may be worth checking your National Insurance record to see how many qualifying years you have.

If you have not reached retirement age the possibility exists to top up your UK state pension by paying voluntary contributions and also to fill gaps in your contributions record. Such gaps can only be filled up to 6 years in the past. Depending on your circumstances the contributions will be either Class 2 (self-employed) or Class 3 contributions.

Since 1^st January 2021 HMRC may ask you to complete form CF83 form which is documented under NI38. This allows HMRC to determine what class of NI you should pay. You then post that to HMRC and a case worked takes around 9 weeks to determine what class of insurance you pay.

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Austrian Pension Systems

The state pension system is only one of the three pillars to the Austrian Pension system (state, occupational and private).State pensions are provided by the Austrian State, occupational pensions schemes are available to certain professions where the employer puts a certain percentage of the salary in to an occupational pension scheme and private pensions are up to the individual.

Austrian State Pension

The Austrian state pension system is a contributary system with both the employee and employer paying in to the system, there are different rules for the self-employed:

To receive the Austrian state pension, contributions must have been paid for least 180 calendar months (15 years). The longer you pay into the system, the higher the income replacement ratio is. Someone paying contributions for 45 years, can receive up to 80% of their average lifetime income while retired. This is referred to as the 45 – 65 – 80 rule. When they reach retirement age (currently 65 for men and 60 for women) they can then apply to receive their state pension. The age of retirement for women will gradually increase until it reaches 65 by 2033. Information about your Austrian State Pension account can be accessed through the Pensionskontorechner, with general information on the Pensionsversicherungsanstalt website. 

Voluntary contributions or Self-Insurance

Austria does allow for self-insurance of the pension scheme. It is also allowed retroactively (12 months).  If 60 months of insurance have already been acquired (except months of self-insurance), the application can be submitted at any time. Gainful employment before self-insurance is not required. Further details can be found on the PVA website.

Combining UK and Austrian Qualifying Years

If you have worked in the UK and Austria and are covered by the Withdrawal AgreementWithdrawal Agreement The Withdrawal Agreement sets out the terms of the UK’s withdrawal from the EU and provides for a deal on citizens’ rights. It sets out a transition period which lasts until 31 December 2020. During this time you can continue to live, work and study in the EU broadly as you did before 31 January 2020.   If you are resident in Austria at the end of the transition period, you will be covered by the Withdrawal Agreement, and your rights will be protected for as long as you remain resident in Austria.   Any rights that are not covered by the Withdrawal Agreement will be the subject of future negotiations.   https://www.gov.uk/government/publications/new-withdrawal-agreement-and-political-declaration   (e.g. Artikel 50Aufenthaltstitel "Artikel 50 EUV" The Aufenthaltstitel "Art 50 EUV" is a residency title to be issued to British citizens from the end of the transition period. Its name is derived from Article 50 of the Treaty on European Union. The "Titel" refers to the document or card itself, and not the right, or permission that it confirms. card holder), you are able to take advantage of the social security co-ordination rules contained in the Withdrawal Agreement. Those not covered by the Withdrawal Agreement may be covered by the Trade and Co-operation agreement between the UK and the EU.

When calculating State Pension entitlement, countries can exchange their National Insurance records and use foreign insurance to make sure that a customer meets that country’s minimum contribution conditions. You’ll have to apply to the pension authority in the country where you’re living or you last worked. If you’ve never worked in the country where you’re living, your host country will forward your claim to the one you last worked in. That country is then responsible for processing your claim and bringing together records of your contributions from all the countries you worked in.

Please note that this only allows you to meet the qualifying years requirement and does NOT necessarily affect the amount that you receive.

Due to the complexities involved the Austrian pension authorities have stated that pension rights will be examined on a case-by-case basis. The YourEurope initiative has provided some information and examples. Below are some examples we have put together.

Example 1 – 9 Years in UK and 6 Years in Austria.

If someone has worked 9 years in the UK and 6 years in Austria, they would normally not qualify for a pension in either country as they would not meet the minimum qualifying criteria. However, by combining the two National Insurance records they would qualify for a pension in both countries as they would both then have 15 qualifying years.

Example 2 – 36 Years in UK and 4 Years in Austria.

The 36 years in the UK means that they would probably receive a full UK pension, but normally they would receive nothing in Austria. By combining the UK NI years with the Austrian years, it means they meet the minimum qualifying criteria for an Austrian state pension.

Example 3 – 5 Years in the UK and 4 Years in Austria.

In this example they would not normally qualify for a pension in either country. However, if a voluntary Class 2 or Class 3 payment was made in the UK, they would meet the10 year qualifying criteria in the UK when combined with the Austrian State pension

Other Austrian Agreements

Austria has some inter-governmental pension insurance co-operations agreements with EU and EEAEEA The European Economic Area (EEA) consists of the 27 EU Member States as well as Iceland, Liechtenstein and Norway. The United Kingdom is not part of the EEA. countries and also some Third Countries (Currently including Albania, Australia, Bosnia Herzegovina, Chile, India, Israel, Canada/Quebec, Moldova, Montenegro, North Macedonia, Philippines, Republic of Korea (South Korea), Serbia, Tunisia, Turkey, Uruguay, USA).

Heading Four of the Trade and Co-operation Agreement between the UK and EU refers to Social Security co-ordination (Social Security Coordination and Visas for short-term Visits) and there is a Protocol on Social Security Coordination. From a benefits perspective, the Protocol provides for the protection of a number of benefits, including aggregation in respect of pensions.

It applies to the U.K. and all EU countries but does not apply to Norway, Iceland, Liechtenstein or Switzerland. Note: There are some unusual paras in section SSC-4 related to Austria. (See also: https://www.gov.uk/government/publications/ukeu-and-eaec-trade-and-cooperation-agreement-ts-no82021)

Useful Links

This Financial Bootcamp page was originally inspired by an article that appeared in The Guardian on 4 September 2021. It is part of British in Austria’s “The Guide – Financial Bootcamp”, a series of pages intended to provide information about financial housekeeping. If you have enjoyed it, or wish to comment on it, please use our “Financial Bootcamp” forum.