Scheduled commencement of pension benefits: What modifications should accompany active pension status?

The German government has announced the implementation of a new policy, the Active Pension, starting from January 2026. This policy, which is part of the coalition agreement, aims to encourage many pensioners to continue working in old age.

The Active Pension will be implemented on a voluntary basis, allowing pensioners to earn up to 2,000 euros per month tax-free, equating to 24,000 euros of tax-free additional income per year. This tax-free allowance is intended to incentivize older workers to remain in the labor market long-term, as the government hopes that at least 50,000 additional workers will stay employed due to this policy.

However, concerns have been raised about the potential for the Active Pension to incentivize more people to retire early. Sandra Maischberger, a moderator, and Johannes Geyer, the deputy head of the Federal Institute for Population Research (Bundesinstitut für Bevölkerungsforschung, BiB), have expressed such reservations. Geyer, in particular, has suggested that reducing the tax burden is an "obvious lever" to promote employment in old age.

The Federal Chancellor, Friedrich Merz (CDU), has announced the concrete date for the implementation of the Active Pension. However, no concrete answer was given regarding the potential incentive for early retirement with the Active Pension.

The Active Pension does not eliminate deductions from pensions, but requires full taxation of additional income, with the exception of mini-jobs with a maximum additional income of 556 euros per month. The policy also includes measures to facilitate temporary re-employment with the former employer and the abolition of the current pre-occupation ban.

The Bundesbank expects only limited effects from the Active Pension. Despite this, the policy is intended to significantly increase the tax-free amount, which could potentially have a more significant impact on employment rates among older workers.

The Active Pension is a new policy in Germany, designed to benefit working pensioners while addressing the challenges faced by the pension system due to an aging population. The forecasts from the BiB suggest that the Active Pension system could have a positive long-term impact on the labor force potential in Germany.