Working after retirement
How to work after retirement without losing pension rights?
Leaving the workforce and moving into retirement can be a difficult step for many people, whether it is because of the expected low pension , or because of concerns about succession, or because we are not quite ready for the change and want to remain active in our profession. The question often arises as to how we can work after retirement without losing our pension rights.
As a general rule, the status of pensioner and the status of insured person in employment are mutually exclusive. But Slovenian law offers a range of possibilities and combinations to work or engage in an activity after retirement while receiving a full or partial pension. There is also the possibility of full reactivation, whereby pension payments do not have to be completely waived. Below are the main options that can ease the transition from work to retirement.
Temporary and casual work for pensioners
Temporary and occasional work for pensioners is available to all pensioners who are not (partly or fully) employed, according to the ZUTD[1] . All types of work can be performed under a temporary or casual work contract, but there are limits on the number of hours, the minimum hourly wage and the maximum earnings. A pensioner may carry out this type of work for a maximum of 90 hours in a calendar month (or, exceptionally, up to three times in a calendar year, 120 hours per month), provided that the cumulative hours in a calendar year do not exceed 1 080 hours. There are also limits on the number of hours that employers can work, depending on the number of employees. Subject to the limits, this type of work does not affect the enjoyment of a pension.
Work through civil contracts
Working under a civil contract, such as an author’s contract, a sub-contract or a mandate contract, does not affect your pension entitlement, regardless of the number of hours worked and the amount of the payment. Care must be taken to ensure that the work is not regular and that the elements of work to which the contract applies are met. For example, the subject matter of an author’s contract can only be an individual intellectual creation, such as an article or a lecture. If regular work is carried out through civil contracts, this would also affect the pension already paid during the period of such work, in the event of a finding of misconduct by the supervisory authorities.
Function as a shareholder, proxy or manager
Pensioners can remain partners, proxies or managers after retirement without this status affecting their enjoyment of a pension, regardless of the number of hours worked or the amount earned. Any combination of these functions is possible for the purpose of combining with a pension, except that the individual may be both a partner and a manager. In the latter case, registration for compulsory insurance is required, which also implies partial or total loss of pension. If the pensioner is both a partner and a managing director in the company, he or she retains the full pension entitlement.
Partial retirement
ZPIZ-2 [2]allows partial retirement. A person who qualifies for old-age (or early) retirement can therefore (self-)work part-time while receiving a salary and a partial pension equal to the difference up to full-time.
This form of employment requires a minimum working time of 2 hours a day or 10 hours a week for employment, or a quarter of full-time work for self-employment, and a maximum working time of 7 hours a day or 39 hours a week. The partial pension shall be calculated on the basis of the pension to which the worker would have been entitled on the date of its application, at a percentage corresponding to the reduction in full-time working hours. If the pensioner is employed or self-employed for at least 4 hours a day or 20 hours a week, he shall be entitled to a higher pro rata part of the pension.
With a minimum of 6 months of additional service, the additional time is properly taken into account when the pension is reassessed and can make a significant contribution to the final amount of the pension.
Full reactivation
The ZPIZ-2[3] also allows the pensioner to (self-)re-enter full-time employment. While he/she is not entitled to a pension payment in the strict sense of the word during this period, if he/she has been receiving an old-age pension, by re-employing he/she also acquires the right to a payment of 40% of his/her already established old-age pension. The latter is payable for a maximum of 3 years of full-time insurance, after which it is reduced to 20%. As in the case of partial retirement, with a minimum of 6 months of additional service, the additional years of service are taken into account when the pension is reassessed and can contribute significantly to the final amount of the pension.
The forms of work available can, alone or in combination, meet many of the needs or desires for additional work after retirement, whether it is to hand over an activity or ensure a suitable succession, to gradually reduce work activity, or to provide a higher final pension amount. It is important to pay attention to the purpose, intended scope and content of the work and to choose the most appropriate path accordingly.
[1] Labour Market Act (Official Gazette of the RS, No 80/10, as amended, “LLA“), Articles 27a to 27g.
[2] Law on Pension and Disability Insurance (Official Gazette of the RS, No 96/12, as amended, “ZPIZ-2“), Articles 40 and 40a.
[3] Article 39a.
