Personnel provisions in Austrian states and municipalities: severance payments and jubilee payments under the VRV 2015

This is an English translation of the Austrian guide Länder und Gemeinden. Quotations from Austrian sources are our translation.

Who applies the VRV 2015

The Regulation applies to “states and municipalities … and their economic undertakings, operations and operation-like institutions, in each case without their own legal personality” (§ 1(1) VRV 2015). According to the explanatory notes of the Federal Ministry of Finance, it is “also to be applied to associations of municipalities on the basis of provincial law (Gemeindeverbandsorganisationsgesetze)”.

The provisions of the VRV 2015 “are to be applied by the territorial authorities at the latest for the financial year 2020 (budgets and financial statements)” (§ 40(2)). Austria has nine federal states (Art. 2(2) B-VG); Statistik Austria gives the “number of municipalities” as 2,092.

When a provision must be recognised

“Provisions are to be recognised for obligations of the territorial authority if:

1. the obligation already exists before the closing date of the financial statements and
2. the obligating event has already occurred before the closing date of the financial statements and
3. the settlement of the obligation will more likely than not lead to a use of funds by the territorial authority and
4. the amount of the obligation can be determined reliably.” (§ 28(1))

“Long-term provisions include in any case”, among others, “provisions for severance payments” and “provisions for jubilee payments” (§ 28(4) nos. 1 and 2).

Measurement

“Long-term provisions are to be measured at their present value. Provisions for severance payments and jubilees are to be measured using the Anwartschaftsbarwertverfahren with the circulation-weighted average yield of federal government bonds (UDRB) or the market interest rate under § 19(5), in each case at the closing date of the financial statements” (§ 28(2)).

“A market interest rate is to be understood exclusively as the 7-year average rate with a remaining term of 15 years published by the Deutsche Bundesbank and applicable at the closing date of the financial statements” (§ 19(5)).

This version of § 19(5) and § 28(2) (Federal Law Gazette II No. 93/2023) is “to be applied for the first time to the budgets and financial statements for the financial year 2024, unless subsection 5 applies” (§ 40(4)). Territorial authorities that had already adopted a budget for 2024 in 2022 apply it for the first time for the financial year 2025 (§ 40(5)).

The Anwartschaftsbarwertverfahren

The explanatory notes of the Federal Ministry of Finance on § 28: “Provisions for severance payments and jubilees are to be measured using the Anwartschaftsbarwertverfahren. The term ‘Anwartschaftsbarwertverfahren’, also called the ‘projected unit credit method’, refers to a financial-mathematical measurement method based on international accounting standards.”

AFRAC 27 describes the same method as “the method prescribed in IAS 19.67”, which “is also called the Anwartschaftsansammlungsverfahren or Anwartschaftsbarwertverfahren” (explanatory notes on para. 39). How it attributes severance payments and jubilee payments to years of service is shown in the guides Austria: severance pay (Abfertigung) and Austria: jubilee payments (Jubiläumsgeld); the guide IAS 19 in Austria explains the method.

The values at 31 December 2025

Further months, the AVÖ UGB rates and mortality tables are on the page Rechnungszinssatz (in German).

Recommendations of the VR Committee

Recommendation VR-K No. 07 “Discounting of personnel provisions” of 29 October 2020 provided as options for the interest rate the UDRB at the closing date of the financial statements or “the 7-year average rate with a remaining term of 15 years published by the Deutsche Bundesbank and applicable at the closing date of the financial statements”. On this: “It is recommended to use the ‘UGB rates’ published on the AVÖ website”. As pension tables, it names “the tables on life expectancy most recently published by Statistik Austria, or other published pension tables. This means in particular the actuarial bases most recently published by the AVÖ.”

Recommendation VR-K No. 08 of 21 March 2022 recommended defining the market interest rate only in § 19(5) and referring to it in § 28(2); both provisions have been worded this way since Federal Law Gazette II No. 93/2023.

Jubilee payment for federal civil servants

“The civil servant may be granted a jubilee payment for loyal service on completing a period of service of 25 years and of 40 years. The jubilee payment amounts to 200% of the monthly salary for a period of service of 25 years and 400% for a period of service of 40 years …” (§ 20c(1) Salary Act 1956). “This federal act applies to all federal civil servants in active service” (§ 1(1) GehG). The rules for employees of the states and municipalities are not covered here.

Sources

• Budget and Accounts Regulation 2015 (Voranschlags- und Rechnungsabschlussverordnung 2015, VRV 2015), § 1, § 19, § 28 and § 40 (RIS, in German, current version)
• Federal Ministry of Finance: VRV 2015, explanatory notes and recommendations of the VR Committee (VR-K No. 07 and No. 08, in German)
• Federal Constitutional Law (B-VG), Art. 2 (RIS, in German)
• Statistik Austria: regional classifications (in German)
• AFRAC statement 27 Personalrückstellungen (UGB), June 2022, explanatory notes on para. 39 (in German)
• Salary Act 1956 (Gehaltsgesetz, GehG), § 1 and § 20c (RIS, in German)
• OeNB: UDRB, daily values and Deutsche Bundesbank: discount rates under § 253(2) HGB (in German)