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Partial pension: New form of reduced‑hours retirement
From 1 January 2026 the new model of partial pension comes into force. The aim is to enable employees to continue working on a reduced basis while receiving a pension. At the same time the existing scheme for reduced‑hours retirement has been revised and access has been restricted.
Partial pension is available to those who are entitled to a regular or early old‑age pension. For corridor pension and long‑term insured pension the qualifying age is 62 years, although for corridor pension from 1 January 2026 there will be a gradual increase to 63 years. The entitlement to a severe‑work pension is, subject to the relevant conditions, granted at the age of 60 years. The statutory pension age for old‑age pension is 65 years for men and currently 61 years for women, with a gradual increase in six‑month steps to 65 years.
Application to the Pension Insurance
In order to take partial pension, a reduction of working time between 25 % and 75 % must be agreed in writing with the employer in a timely manner. In addition, an application must be submitted to the Pension Insurance (PV). If the Pension Insurance grants the partial pension, a corresponding decision is issued.
The amount of the partial pension depends on the extent of the working‑time reduction and the total credit of the previous year (depending on the reference date), resulting in the following effects of the working‑time reduction on the share of the total credit:
Reduced‑hours retirement
Alongside the introduction of partial pension, access to reduced‑hours retirement is significantly restricted. Previously, reduced‑hours retirement benefits could be received for up to five years before the statutory pension age; this period has now been limited to three years before meeting the entitlement requirements for a corridor pension or before reaching the statutory pension age. The required insurance period for entitlement to reduced‑hours retirement benefits (accrual) is also being increased step‑wise from the current 780 weeks to a future 884 weeks.
There are also new restrictions on side‑jobs: any additional employment with another employer results in the loss of entitlement to reduced‑hours retirement benefits. In addition, the financial incentive for employers is reduced: for example, the compensation for wage equalisation falls from 90 % to 80 % from 2026 onward.
Conclusion
With the introduction of partial pension a flexible transition from working life to retirement is created, albeit under clearly defined conditions. At the same time access to reduced‑hours retirement is restricted. The aim is better predictability and security for the transition phase into retirement, both for employees and for the pension system.
Application to the Pension Insurance
In order to take partial pension, a reduction of working time between 25 % and 75 % must be agreed in writing with the employer in a timely manner. In addition, an application must be submitted to the Pension Insurance (PV). If the Pension Insurance grants the partial pension, a corresponding decision is issued.
The amount of the partial pension depends on the extent of the working‑time reduction and the total credit of the previous year (depending on the reference date), resulting in the following effects of the working‑time reduction on the share of the total credit:
- Reduction 25 % to 40 % – share 25 %
- Reduction 41 % to 60 % – share 50 %
- Reduction 61 % to 75 % – share 75 %
Reduced‑hours retirement
Alongside the introduction of partial pension, access to reduced‑hours retirement is significantly restricted. Previously, reduced‑hours retirement benefits could be received for up to five years before the statutory pension age; this period has now been limited to three years before meeting the entitlement requirements for a corridor pension or before reaching the statutory pension age. The required insurance period for entitlement to reduced‑hours retirement benefits (accrual) is also being increased step‑wise from the current 780 weeks to a future 884 weeks.
There are also new restrictions on side‑jobs: any additional employment with another employer results in the loss of entitlement to reduced‑hours retirement benefits. In addition, the financial incentive for employers is reduced: for example, the compensation for wage equalisation falls from 90 % to 80 % from 2026 onward.
Conclusion
With the introduction of partial pension a flexible transition from working life to retirement is created, albeit under clearly defined conditions. At the same time access to reduced‑hours retirement is restricted. The aim is better predictability and security for the transition phase into retirement, both for employees and for the pension system.