By: HUB’s EB Global Benefits Team
What is it about?
Across Europe, governments and social partners continue to reshape pension and retirement frameworks in response to demographic aging, labor shortages and rising fiscal pressure. Recent reforms reflect a dual trend: tightening access to early retirement and strengthening minimum pension protections, while also expanding occupational pension participation and flexibility. These developments will affect retirement planning, workforce strategy, payroll costs and benefit governance for employers operating across the region.
- Austria — stricter early retirement eligibility
Austria is introducing significant changes to early retirement eligibility under the General Pensions Act (APG). The new rules apply to individuals born in 1964 and later, where the pension assessment date falls after Dec. 31, 2025.
The early retirement age increases from 62 to 63, with a gradual phase-in depending on birth quarter. In parallel, the required contribution period will rise over time from 480 to 504 months. Individuals born before Jan. 1, 1964 remain under the previous thresholds.
Transitional protections apply to individuals who entered part-time retirement or receive a bridging allowance prior to June 16, 2025. The adjustments are mirrored across public and private pension frameworks, including civil servants and sector-specific pension systems.
- Germany — wider salary deferral opportunities
Germany continues to pursue retirement reforms aimed at strengthening occupational pension participation and encouraging longer workforce participation.
The government has presented a draft of the Second Act to Strengthen Occupational Pensions (BRSG II), expected to enter into force this year. Key measures include expanded support for low-income earners, increasing subsidy eligibility thresholds and raising the maximum subsidized employer contribution. Employers may offset a portion of these costs through tax relief.
A major structural change is the ability to introduce opting-out salary conversion arrangements through company agreement rather than requiring a collective bargaining agreement, provided employers contribute at least 20% of the converted salary and contributions become immediately non-forfeitable. The reform also increases flexibility for partial pension recipients and creates a legal right for employees returning from unpaid leave to resume pension participation.
Separately, Germany’s Active Retirement Act, effective January 2026, introduces a new €24,000 annual tax exemption for working pensioners who have reached statutory retirement age. This supports part-time, project-based and flexible employment models for retirees and is expected to influence workforce retention strategies for older employees.
- Croatia — expanded pension payments
Croatia has strengthened pensioner support through the introduction of an annual pension supplement, the godišnji dodatak, effectively functioning as a “13th pension.” This supplement is paid automatically each December to all pensioners who received a pension during the calendar year.
In addition, Croatia has significantly strengthened protections for low-income pensioners by increasing minimum pension guarantees. The minimum pension is set at 106% of the current pension value (AVM) per year of service, with enhanced protection for disability pensions caused by workplace injury or occupational disease, where the calculation assumes a full 40-year service record. Croatia also maintains twice-yearly pension indexation and expanded eligibility for combining partial family pensions with personal pensions.
Impact on companies
- Rising employer pension costs in multiple markets, including mandatory or enhanced employer contributions
- Workforce planning and retention impacts as governments introduce incentives for longer working lives
- Increased payroll and administrative complexity, particularly where new systems require automatic enrollment, contribution tracking or reporting obligations
- Higher compliance exposure due to phased implementation dates and transitional rules that vary significantly by country
Suggested employer action
- Conduct a multi-country pension compliance review to map upcoming changes and ensure alignment of payroll, HR policies and pension plan governance.
- Model cost impacts from increased contribution obligations and new employer matching requirements.
- Assess plan design and harmonization opportunities, especially for seeking consistency across European operations.
- Update employee communication strategies, focusing on retirement readiness and explaining reforms that affect eligibility, contributions and flexibility.
- Engage pension providers and local advisors early to confirm operational readiness, particularly where opt-out structures, auto-enrolment or new contribution rules will require system changes.
If you have any questions, please contact your HUB advisor. View more updates in our Global Benefits Directory.