Who is eligible for bonus advantaged retirement saving?
Any resident of Austria who is subject to unlimited tax liability and is not in receipt of a state old age pension — not just salaried employees but the self-employed, farmers, housewives, students and others.
Can parents purchase bonus advantaged provident saving products for their children?
What is the ceiling for bonus advantaged, tax-free contributions?
The subsidised contributions are based on the maximum assessment basis for social security contributions. In 2009 the maximum total annual contributions to all pension plans were EUR 2.214. Higher contributions are possible, but do not attract the bonus; they are however tax free (no investment income withholding tax).
How are contributions invested?
At least 40% of the plan contributions are invested in equities — mostly shares listed on the Vienna Stock Exchange.
How high is the bonus?
The bonus consists of a fixed 5.5% component and a variable component based on the secondary market yield, which is currently 4 %. The total bonus was thus 9.5% in the 2008 calendar year (calculation and amount along the same lines as the home loan saving bonus) up to a maximum of EUR 206.64.
Can I change the contribution level or halt payments?
Yes, whenever you want.
Can I receive state home loan and provident saving subsidies at the same time?
Yes. There is a separate limit, currently set at EUR 1,000, for bonus advantaged home loan savings.
How and when can I gain access to my capital?
The minimum term is established by the contract, and is at least ten years. All fund based plans are subject to a common earliest withdrawal date in a given year, meaning that the actual minimum term varies from ten years if the plan commenced at the end of a calendar year and almost 11 years if it commenced at the start the year.
Contributors can also withdraw their capital after the ten-year minimum period.
– If you then reinvest the capital in the approved manner you retain the state bonus and tax exemption on profits, and your right to the full value of your contributions and bonuses is protected.
“In the approved manner” means:
- Transfer of the entitlements to an insurance company (supplementary pension insurance policy)
- Transfer of the entitlements to a bank (purchase of pension investment fund units)
- Transfer of the entitlements to a pension fund
- Transfer of the entitlements to another pension plan
If you make “free use” of the capital you must repay half of the bonus, and the profits are retroactively taxed. This retroactive taxation is at 25% of the difference between the contributions (excluding the bonus) and the amount paid out. The guarantee under the ESPA Vorsorge Classic scheme still applies.
Can I leave a bonus advantaged pension plan to my heirs?
During the accumulation stage you can bequeath fund units in accordance with the normal legal succession rights or the wishes expressed in your will. However, to avoid retroactive taxation the bequest must be included in the contract.
Transfers of entitlements to other pension plans are exempt from inheritance tax (section 15 Inheritance Tax Act).
During the pension stage the pension entitlements pass to your spouse or common law partner, or children aged no more than 27 in the event your death, provided that an agreement to this effect has been made with the insurance company before pension starts being paid. Otherwise the pension is forfeited.
What is the maximum age for bonus advantaged pension plans?
The ESPA VORSORGE CLASSIC fund based solution only makes sense if most of the accumulation stage is bonus advantaged, which is the case up to the age of about 55.