Occupational severance and retirement funds – information about “Abfertigung neu“
Occupational severance and retirement funds were created as a result of the introduction of “Abfertigung neu” (“the new severance payment scheme”) on 1 July 2002 as part of the Austrian severance system.
Every employer is required to transfer an amount equivalent to 1.53 percent of an employee’s monthly salary into an occupational severance and retirement fund. The self-employed are required to conclude a contract with an occupational severance and retirement fund themselves. For specific professional groups – e.g. lawyers, notaries, civil engineers, farmers and foresters, … – there is a voluntary possibility to conclude such a provision for self-employed.
The occupational severance and retirement fund’s duty is to manage the contributions that have been paid in. These contributions are held by the occupational severance and retirement funds, which hold the contributions in trust for the entitled beneficiaries. This activity requires a separate licence in accordance with the Banking Act (BWG; Bankwesengesetz).
There are currently eight occupational severance and retirement funds in Austria. As a rule the employer decides with which occupational severance and retirement fund it concludes a contract.
Investment conditions that have been approved by the FMA in advance must exist for the investment group managed by the occupational severance and retirement fund. It is to be highlighted that a capital guarantee is legally prescribed.
Your employer pays 1.53 % of your salary as well as any special payments into the occupational severance and retirement fund for you.
You must be informed by your occupational severance and retirement fund on an annual basis, with the reference date of 31 December of the preceding year. The information may be received within three months of the end of the year, and must be in written. It must contain the following information:
- the severance entitlement acquired in the past year,
- the contributions made in the financial year by the employer,
- the costs that you have to bear (for example, management fees)
- the allocated performance of the investment as well as
- the total acquired severance entitlement
- your name and social insurance number
- the principles of the investment policy as well as the investments held as of the reference date
The severance funds must manage an account for every employee, which is used as the basis for the severance calculation.
The FMA has issued minimum standards about the format of this account information.
In principle a claim exists to severance every time an employment relationship is terminated. Depending on whether your existing employment relationship is terminated, you retire, or in the case of death, there are different options that may be chosen. You will be informed by the occupational severance and retirement fund about your options for reimbursement by the occupational severance and retirement fund.
An easy to understand and comprehensible overview about the various models can be found (in German only) on the Arbeiterkammer website.