Severance Pay in Austria in 2026: How Abfertigung neu Works
Austria’s new severance system, known as Abfertigung neu, was introduced on 1 January 2003. It modernised the previous rules and made severance savings more flexible, while aiming to provide employees with long-term financial security regardless of changes in their employment.
Who is covered by Abfertigung neu?
The system applies to employees whose employment began on or after 1 January 2003. Since 1 January 2008, it has also been compulsory for insured freie Dienstnehmer. Public-sector employees are excluded because different rules apply to them.
A key feature is that the accumulated savings remain available regardless of how the employment ends. They do not disappear if you resign yourself.
How employer contributions work
Every employer must pay 1.53% of an employee’s gross salary and any special payments, such as 13th and 14th-month salaries, into a company pension fund each month. This rate remains unchanged in 2026.
- The first month of employment is contribution-free.
- Contributions begin in the second month.
- The health insurance provider collects the contributions and transfers them to the fund.
- Nothing is deducted from the employee’s salary for this contribution.
The money is paid into a Mitarbeitervorsorgekasse, officially called a Betriebliche Vorsorgekasse or BV-Kasse. These funds manage and invest the contributions. Austria has eight such funds, and the employer generally chooses which one to use.
When changing jobs, an employee may request that the savings be transferred to the fund used by the new employer.
When can you request payment?
You can request payment if at least three contribution years have accumulated since contributions began or since the last payment. Periods accumulated with different employers are added together.
Payment can be requested when employment ends in one of the following ways:
- Dismissal by the employer
- Mutual agreement
- Expiry of a fixed-term contract
- Unjustified or faultless immediate dismissal
- Justified resignation, including resignation because of childbirth
- The employee’s death
If you resign yourself, leave without a justified reason, are dismissed for misconduct, or have not yet completed three contribution years, the money is not lost. It remains in the fund and continues to earn returns.
When you retire, you can receive the severance amount even if these conditions have not been met.
Payment and transfer options
If the payment conditions are met, you must notify the fund in writing within six months of the end of employment about what you want to do with the money.
Your options are:
- Receive the money as a lump-sum payment
- Keep investing it in the existing fund
- Transfer it to the fund of your new employer
- Transfer it to a Pensionskasse
- Transfer it to supplementary pension insurance
If you do not provide instructions, the money continues to earn returns in a contribution-free account. After you submit your request, the fund must complete the payment or transfer within five working days after the end of the second calendar month.
Tax treatment
Lump-sum payment
A lump-sum payment is subject to a preferential 6% wage income tax (Lohnsteuer). The fund deducts this tax before paying the money to you.
Transfer to a pension product
Transfers to a pension fund or supplementary pension insurance are tax-free. Any later amount paid as an annuity, such as a monthly supplementary pension, is also completely tax-free.
Advantages and risks of the system
Because contributions are linked to the employee rather than the employer, changing jobs does not mean losing the accumulated severance savings. Contributions continue to build up throughout employment, creating a financial reserve for the end of the employment relationship.
Employees can track contributions and the performance of the funds. However, investing the money involves a degree of risk, and market fluctuations can affect returns. The law provides a capital guarantee: when the money is paid out, the employee must receive at least the amount contributed by the employer.
Different severance rules apply to public-sector employees, so people working in the public service should check which provisions cover them. Further details are available on the official Austrian business portal (USP).
Practical steps when employment ends
- Check your BV-Kasse statements and confirm how many contribution years have accumulated.
- Confirm how your employment ended and whether it qualifies for immediate payment.
- Contact the BV-Kasse in writing within six months of the employment ending.
- Choose between a lump-sum payment, continued investment, a transfer to a new employer’s fund, or a pension product.
- Before choosing a lump-sum payment, account for the 6% Lohnsteuer deduction.
- If you work in the public service, check the separate rules that apply to your employment.