Calculation of the early old-age pension

Calculation of pension amount

The same calculation formula is applied to the old-age pension and the early old-age pension.

The old-age pension is made up of the following components:

• fixed increases and
• proportional increases.

Fixed increases are granted on the basis of insurance duration, while proportional increases are granted on the basis of pensionable income earned during the insurance record.

Since the Reform Act of 21 December 2012, the rates of fixed and proportional increases, the threshold applicable to proportional increases and the rise in the rate of proportional increases per unit over the given threshold have been determined according to the year in which pension entitlement began.

The amount of the gross annual pension is calculated using the cost-of-living index number 100 and 1984 as the base year. The amount thus obtained is adjusted using the current cost-of-living index and the revaluation factor in force and divided by 12 to obtain the monthly amount.

Early old-age pension and professional activity

In case of self-employment

a) where the income over one year does not exceed one third of the minimum social wage per month, the early old-age pension is not reduced,

b) where the income over one year exceeds one third of the minimum social wage per month, the early old-age pension will be withdrawn in accordance with current legislation. A recent ruling by the Constitutional Court declared the above legal provision unconstitutional. The CNAP therefore does not currently make such pension withdrawals. Further information on this subject can only be provided following future legislative amendments establishing a new legal basis for dealing with the issue in question.

In case of employed activity

a) where the annual salary does not exceed one third of the minimum social wage, the early old-age pension will not be reduced,

b) where the annual salary exceeds one third of the minimum social wage and remains below the average of the 5 highest annual pensionable incomes during the insurance record, the early old-age pension is reduced to the extent that the sum of the pension and salary exceeds the average of the 5 highest annual pensionable incomes during the insurance record.

c) where the annual salary exceeds the average of the 5 highest annual pensionable incomes during the insurance record, the early old-age pension will be withdrawn.

Refixing

In the event of a combination with a professional income, the early old-age pension is only recalculated once a year with effect from 1 April, unless:

• the pension holder proves a reduction in income of at least 10% over a three-month period,
• the pension holder’s income increases by more than 25%,
• the pension holder resumes or gives up work.

The anti-overlapping provisions remain in force until the age of 65. At that point the salary or income earned during the period of entitlement to the early old-age pension is taken into account and the proportional increases are raised.

Combination with an accident allowance

If an old-age pension is combined with a pension resulting from an accident at work or an occupational disease, the anti-overlapping rules for pensions must be applied.

The pension is reduced to the extent that, together with the accident allowance, it exceeds a ceiling set either at the average of the five highest annual incomes during the insurance record, or at the income used to calculate the accident allowance.