Federal Cabinet decision
Anyone who continues to work voluntarily in retirement can earn some additional income without having to pay tax – with an active pension. This has been decided by the Federal Government. When is an active pension available? Who can make use of it? Questions and answers at a glance.
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Employees and employers should benefit equally from the active pension.
Photo: Getty Images/Cultura RF
The active pension rewards those who reach the statutory retirement age and continue to work voluntarily. It is an important element in counteracting the labour shortage and the effects of demographic change. This makes continuing to work more attractive and taps into additional skilled labour.
With the approval of the active pension by the Federal Cabinet, the bill was passed on to the Bundestag and Bundesrat. The active pension provisions are set to take effect on 1 January 2026.
What is the active pension?
The active pension allows people who have already reached the statutory retirement age to voluntarily continue working in retirement. People can earn up to 2,000 euros per month tax-free.
Who can make use of the active pension?
The active pension applies to workers subject to social insurance contributions from the time they reach the standard retirement age. The taxpayer benefits regardless of whether he or she draws a pension or postpones drawing a pension.
The active pension does not apply to the self-employed, freelancers, farmers and foresters, mini-jobs and civil servants. The tax exemption is limited to persons who have exceeded the standard retirement age – reaching the age of 67 – including transitional arrangements.
Do I have to pay tax on the active pension?
Additional earnings of up to 2,000 euros per month are generally tax-free. However, contributions to health and long-term care insurance must be paid. Anyone who earns more than 2,000 euros must pay tax on the excess amount.
Why is the active pension being introduced?
With the active pension, the Federal Government seeks to create an incentive for people to stay in the labour market longer. The measure is also intended to help alleviate the shortage of skilled labour. This benefits employees and employers alike. A higher labour force participation rate also strengthens the economy. The additional contributions increase the income of the social insurance schemes. The active pension therefore also serves intergenerational and distributional fairness.
An evaluation is planned after two years in order to review the active pension.