Partial old-age pension at age 61

In connection with the 2017 pension reform, the partial old-age pension replaced the part-time pension. The partial old-age pension offers a flexible way to combine working and partial retirement.

As of 2017, those born in 1949 or later can retire on a partial old-age pension as of age 61. For those born in 1964, the age limit is 62 years, and as of those born in 1965, the age limit will be linked to life expectancy.

The partial old-age pension can be 25 or 50 per cent of the pension that has accrued up to the time that the pension is drawn. If taken early (before reaching one’s own retirement age), the part of the pension that is taken out will be permanently reduced by 0.4 per cent for each month that the pension is taken early. For example, if an individual takes out 25 per cent of their accrued pension two years before reaching the retirement age, the part taken out will be permanently reduced by 9.6 per cent. The reduction is permanent, which means that this part of the pension will be reduced also when the individual retires on a full old-age pension or some other pension.

The partial old-age pension is adjusted with the life expectancy coefficient.

An individual who gets a partial old-age pension can continue to work for as much as they like. The number of working hours or earned wage amount are in no way restricted.

Example, gross earnings €2,000/month

Partial old-age pension and subsequent old-age pension

In the examples below, a person retires on a partial old-age pension at age 61.  The total wage and pension are given in gross and net amounts.

The examples have been calculated under the following assumptions:

  • the individual stops working altogether,
  • the individual continues working with a salary that is half of their pre-retirement salary,
  • the individual continues working with a full salary.

The old-age pension following the partial old-age pension is calculated at the individual’s retirement age. In the comparison, the individual did not retire on a partial old-age pension at all but carried on working full time until reaching their retirement age.

Assumptions used in the calculations:

  • Year of birth: 1957
  • Age at which eligible for a partial old-age pension: 61 years
  • Retirement age: 63 years 9 months
  • Salary: €2,000/month (gross), €1,587/month (net)
  • Earned pension by the end of the year in which the partial old-age pension begins: €1,000/month
  • The reduction for early retirement has been taken into account as a factor reducing the national pension (the earnings-related pension that an individual would get [without the reduction for early retirement] reduces the national pension in full).
  • The national pension has been reduced for 18 months and has been calculated for a retiree living alone.
MONTHLY WAGE ALONGSIDE PARTIAL OLD-AGE PENSION, € 0 1,000 2,000
Partial old-age pension, 50% 416 416 416
Total income
gross 416 1,416 2,416
net 416 1,314 1,909
Old-age pension following the partial-old-age pension
earnings-related pension 891 935 977
national pension 167 146 127
Total pension, gross 1,058 1,081 1,104
Total pension, net 999 1,013 1,027
Old-age pension when the individual has not drawn a partial old-age pension and has continued working full time
earnings-related pension 1,038 1,038 1,038
national pension 128 128 128
total pension, gross 1,166 1,166 1,166
total pension, net 1,065 1,065 1,065

Example when the individual continues working at a monthly salary of €1,000

Partial old-age pension, 50%
€1,000/month x 50% = €500/month

Reduction (0.4%/month) for early retirement (from age 61 to retirement age 63  yrs 9 mos = 33 months): 33 x 0.4% = 13.2%

Reduction for early retirement: €500 x  13.2% = €66/month
Monthly pension: €500 – €66 = €434/month

Adjusted with the life expectancy coefficient confirmed for 2018:
€434/month x 0.95738 = €416/month

Wage + partial old-age pension = €1,000 + €416/month = €1,416/month (gross), €1,314/month (net)


Old-age pension at retirement age (63 years 9 months):

Part of earned pension not taken out as partial old-age pension:
50% x €1,000/month = €500/month
Adjusted with the estimated life expectancy coefficient for the age group: €500/month x 0.95143 = €476/month

Pension earned alongside drawing a partial old-age pension: accrual rate for 2-year-transition period (1.7%) and regular accrual rate for 9 months (1.5%), multiplied by the life expectancy coefficient = €43/month

Total old-age pension: €416 + €476 + €43 = €935/month

Reduced national pension: €146/month

Total pension: €1,081/month (net € 1,013 month)

If the individual were not to take out partial old-age pension and would continue working full time, their earnings-related pension would amount to €1,038/month + the reduced national pension €128/month. The total pension: €1,166/month (gross), €1,065/month (net)

The partial old-age pension has been assumed to begin on 1 January. The calculations do not include the effect of indexing. Taxes and contributions have been calculated based on data from 2017, assuming that the annual earnings = 12 x the monthly earnings. The calculations have also taken into account the effects of the

  • state tax,
  • average municipal tax,
  • public broadcasting tax,
  • health insurance contributions,
  • earnings-related pension insurance contributions (for 53-62-years olds),
  • the unemployment insurance contribution, and
  • automatic reductions.

Example, gross earnings €3,000/month

Partial old-age pension and subsequent old-age pension

In the examples below, a person retires on a partial old-age pension at age 61.  The total wage and pension are given in gross and net amounts.

The examples have been calculated under the following assumptions:

  • the individual stops working altogether,
  • the individual continues working with a salary that is half of their pre-retirement salary,
  • the individual continues working with a full salary.

The old-age pension following the partial old-age pension is calculated at the individual’s retirement age. In the comparison, the individual did not retire on a partial old-age pension at all but carried on working full time until reaching their retirement age.

Assumptions used in the calculations:

  • Year of birth: 1957
  • Age at which eligible for a partial old-age pension: 61 years
  • Retirement age: 63 years 9 months
  • Salary: €2,000/month (gross), €1,587/month (net)
  • Earned pension by the end of the year in which the partial old-age pension begins: €1,000/month
MONTHLY WAGE ALONGSIDE PARTIAL OLD-AGE PENSION, € 0 1,500 3,000
Partial old-age pension, 50% 623 623 623
Total income
gross 623 2,123 3,623
net 623 1,761 2,545
Old-age pension following the partial-old-age pension
gross 1,337 1,402 1,466
net 1,170 1,210 1,249
Old-age pension when the individual has not drawn a partial old-age pension and has continued working full time
gross 1,556 1,556 1,556
net 1,304 1,304 1,304

Example when the individual continues working at a monthly salary of €1,500

Partial old-age pension, 50%
€1,500/month x 50% = €750/month

Reduction (0.4%/month) for early retirement (from age 61 to retirement age 63  yrs 9 mos = 33 months): 33 x 0.4% = 13.2%

Reduction for early retirement: €750 x  13.2% = €99/month
Monthly pension: €750 – €99 = €651/month

Adjusted with the life expectancy coefficient confirmed for 2018:
€434/month x 0.95738 = €623/month

Wage + partial old-age pension = €1,500 + €623/month = €2,123/month (gross), €1,761/month (net)


Old-age pension at retirement age (63 years 9 months)

Part of earned pension not taken out as partial old-age pension:
50% x €1,500/month = €750/month
Adjusted with the estimated life expectancy coefficient for the age group: €750/month x 0.95143 = €714/month

Pension earned alongside drawing a partial old-age pension: accrual rate for 2-year-transition period (1.7%) and regular accrual rate for 9 months (1.5%), multiplied by the life expectancy coefficient = €65/month

Total old-age pension: €623 + €714 + €65 = €1,402/month (gross), €1,210 (net)

If the individual were not to take out partial old-age pension and would continue working full time, their earnings-related pension would amount to €1,556/month (gross), €1,304/month (net)

The partial old-age pension has been assumed to begin on 1 January. The calculations do not include the effect of indexing. Taxes and contributions have been calculated based on data from 2017, assuming that the annual earnings = 12 x the monthly earnings. The calculations have also taken into account the effects of the

  • state tax,
  • average municipal tax,
  • public broadcasting tax,
  • health insurance contributions,
  • earnings-related pension insurance contributions (for 53-62-years olds),
  • the unemployment insurance contribution, and
  • automatic reductions.

Example, gross earnings €4,000/month

Partial old-age pension and subsequent old-age pension

In the examples below, a person retires on a partial old-age pension at age 61.  The total wage and pension are given in gross and net amounts.

The examples have been calculated under the following assumptions:

  • the individual stops working altogether,
  • the individual continues working with a salary that is half of their pre-retirement salary,
  • the individual continues working with a full salary.

The old-age pension following the partial old-age pension is calculated at the individual’s retirement age. In the comparison, the individual did not retire on a partial old-age pension at all but carried on working full time until reaching their retirement age.

Assumptions used in the calculations:

  • Year of birth: 1957
  • Age at which eligible for a partial old-age pension: 61 years
  • Retirement age: 63 years 9 months
  • Salary: €4,000/month (gross), €2,700/month (net)
  • Earned pension by the end of the year in which the partial old-age pension begins: €2,000/month
MONTHLY WAGE ALONGSIDE PARTIAL OLD-AGE PENSION, € 0 2,000 4,000
Partial old-age pension, 50% 831 831 831
Total income
gross 831 2,831 4,831
net 831 2,185 3,164
Old-age pension following the partial-old-age pension
gross 1,782 1,868 1,955
net 1,443 1,497 1,556
Old-age pension when the individual has not drawn a partial old-age pension and has continued working full time
gross 2,075 2,075 2,075
net 1,630 1,630 1,630

Example when the individual continues working at a monthly salary of €2,000

Partial old-age pension, 50%
€2,000/month x 50% = €1,000/month

Reduction (0.4%/month) for early retirement (from age 61 to retirement age 63  yrs 9 mos = 33 months): 33 x 0.4% = 13.2%

Reduction for early retirement: €1,000 x  13.2% = €132/month
Monthly pension: €1,000 – €132= €868/month

Adjusted with the life expectancy coefficient confirmed for 2018:
€868/month x 0.95738 = €831/month

Wage + partial old-age pension = €2,000 + €831/month = €2,831/month (gross), €2,185/month (net)


Old-age pension at retirement age (63 years 9 months)

Part of earned pension not taken out as partial old-age pension:
50% x €2,000/month = €1,000 month
Adjusted with the estimated life expectancy coefficient for the age group: €1,000/month x 0.95143 = €951/month

Pension earned alongside drawing a partial old-age pension: accrual rate for 2-year-transition period (1.7%) and regular accrual rate for 9 months (1.5%), multiplied by the life expectancy coefficient = €86/month

Total old-age pension: €831+ €951 + €86 = €1,868/month (gross), €1,497 (net)

If the individual were not to take out partial old-age pension and would continue working full time, their earnings-related pension would amount to €2,075/month (gross), €1,630/month (net)

The partial old-age pension has been assumed to begin on 1 January. The calculations do not include the effect of indexing. Taxes and contributions have been calculated based on data from 2017, assuming that the annual earnings = 12 x the monthly earnings. The calculations have also taken into account the effects of the

  • state tax,
  • average municipal tax,
  • public broadcasting tax,
  • health insurance contributions,
  • earnings-related pension insurance contributions (for 53-62-years olds),
  • the unemployment insurance contribution, and
  • automatic reductions.
 

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