The pension of civil servants and employees covered by the state pension system is determined by the State Employees’ Pensions Act (VaEL).
Your pension is made up of two components that are calculated in fundamentally different ways: pension accrued until the end of 2004 and pension earned as of the start of 2005 until retirement.
Accrual of pension up to the end of 2004
The pension component accrued until the end of 2004 is calculated according to the ‘old rules’, on the basis of the employment period that entitles you to a pension and your pensionable earnings.
Pensionable earnings are calculated on the basis of the years prior to the end of employment. If, for example, your employment was valid on 31 December 2004, your pensionable earnings will be calculated on the basis of your earnings in the preceding ten years (average earnings from 1995–2004). If your employment is shorter, a shorter period of time will be used, down to a period of one month.
Pension accrues as of the age of 23 for a consecutive period of employment with the state lasting at least one month.
Pension accrues as a percentage based on your pensionable earnings:
- 2.2% annually (additional cover) or 2% annually (basic cover) until 31 December 1994
- 1.5% per year as of 1 January 1995
Pension accrued from state employment at the basic cover level until the end of 2004 will be integrated with other earnings-related pensions (including private-sector pensions); in other words, there is a cap on state pensions.
Pension accrual since 1 January 2005
As of 1 January 2005, the duration of employment is no longer significant, but rather pension accrues on employment earnings between the ages of 18 and 68. When calculating the pension, earnings are increased to the level of the starting year of retirement using a wage coefficient and the employee’s pension contribution is deducted from the earnings. There is no maximum amount of pension, so the longer you work, the better your pension will be.
Pension accrues as follows:
- 1.5% of your annual earnings between the ages of 18 and 52
- 1.9% of your annual earnings between the ages of 53 and 62
- 4.5% of your annual earnings between the ages of 63 and 67
Pension accrual ends after turning 68, but if you do not want to retire at 68 your pension will be supplemented with an increase for deferred retirement.
Pension accrues as of 1 January 2005 even for certain unpaid periods (e.g. maternity leave, parental leave, unemployed periods), on the basis of the earnings or self-employment income on which the social benefits are based. Employment while collecting a pension accrues new pension as of 1 January 2005 up to the age of 68. Regardless of your age, the accrual percentage is 1.5% of your annual income.
Pension accrual for projected pensionable service
The projected pensionable service component is most commonly incorporated in disability pension. The projected pensionable service increases the amount of pension you receive, because the pension is calculated as though you were going to continue in working life until the age of 63 (or a lower old-age pension retirement age). The projected pensionable service period is the time from the start of the year during which the disability began to the age of 63 or, if your personal retirement age is lower, then the lower retirement age.
Projected pension rights apply to your disability pension if you have, during the past 10 years, earned the minimum amount under the earnings-related pension acts, which at the 2010 level is EUR 15,470.09.
