Austrians use the word »Pension« when referring to pension and retirement as opposed to the word »Rente« used commonly in Germany.

The Austrian pension system is based on three pillars:

The Austrian pension model is based on the mandatory public pillar which is for a lot of people the only source of income after retirement. Contributions to the Austrian state pension are made by both employer and employee.

The second pillar includes voluntary private pension plans (based on the Austrian »Betriebspensionsgesetz«). Payments are made primarily by the employer but usually the employee is also able to make voluntary payments.

There are three different types of company pension provisions:

• a pension plan, comparable to Austrian »Pensionskasse«

• a pension promise and

• life insurance and other company financed pension plans imcomparable to Austrian »Pensionskasse«

The third pillar is the private, individual and voluntary pension insurance plan. Payments are usually made by the employee.

National as well as international regulations are based on principles of territoriality and gainfully employed individuals should be insured at their respective place of employment. This regulation can be overruled in regards to international assignments – if an insured person travels abroad briefly on an assignment for work, national insurance coverage will continue to be provided (so-called »world-wide principle«).

The application of both principles can result in double or multiple social security obligations. Coordination is currently based on the following regimes:

• EU Regulations – applicable to EU/EEA member countries and Switzerland

• Bilateral agreements with third countries

The principle of single coverage should also be mentioned where an employee is generally insured only under the law of one member country.

The provisions of the European Conventionon Social Security – which have been in effect for more than 30 years – ensure that EU citizens have sufficient social security coverage as individuals should feel free to exercise their right of free mobility within the EU. Individuals moving freely within the EU should not be put in worse position than someone who has always resided and worked in a single member
country.

The provisions are stated in new regulation (EG) Nr. 883/2004 in effect as of May 1st 2010. Contrary to the former regulation, improvements have been implemented. Please note that the new regulation is currently not applicable for Switzerland, Norway, Liechtenstein and Iceland. These countries still adhere to the »old« regulation (EEC) 1408/71.

In many cases, rules of exceptions to the principle of territoriality allow an employee to  remain within his or her existing social security system if sent abroad for limited periods of time to one or several EU/EEA member countries or to Switzerland.

In addition, Austria has bilateral agreements with several third countries regarding social security coverage. These agreements support insurance claims and coverage. If payments have been paid in one country, they will be accepted in another country which is party to the agreement. Some agreements cover other areas including illness, accidents, unemployment, and family benefits. Many bilateral agreements also state exceptions which deviate from the principle of territoriality. In cases of assignments abroad, it is possible to continue to be insured in the employee’s home country for a certain number of years.