Partial Old-age Pension
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.
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.
Partial old-age pension and wage
| Monthly wage | 0 | 1,000 | 2,000 |
| Partial old-age pension, 50 % | 416 | 416 | 416 |
| Total income, gross | 416 | 1,416 | 2,416 |
| Total income, 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.
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
Partial old-age pension and wage
| Monthly wage | 0 | 1,500 | 3,000 |
| Partial old age pension, 50 % | 623 | 623 | 623 |
| Total income, gross | 623 | 2,123 | 3,623 |
| Total income, net | 623 | 1,761 | 2,545 |
Old-age pension following the partial old-age pension
| Pension, gross | 1,337 | 1,402 | 1,466 |
| Pension, 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
| Pension, gross | 1,556 | 1,556 | 1,556 |
| Pension, 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.
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
Partial old-age pension and wage
| Monthly wage | 0 | 2,000 | 4,000 |
| Partial old-age pension, 50 % | 831 | 831 | 831 |
| Total income, gross | 831 | 2,831 | 4,831 |
| Total income, net | 831 | 2,185 | 3,164 |
Old-age pension following the partial-old-age pension
| Pension, gross | 1,782 | 1,868 | 1,955 |
| Pension, 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
| Pension, gross | 2,075 | 2,075 | 2,075 |
| Pension, net | 1,443 | 1,443 | 1,443 |
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.