Working in a pension scheme is tax-advantageous

In view of demographic change and the associated problems, various measures are to be introduced to make working for longer – either whilst in retirement or instead of retiring – more attractive. This is to be achieved through financial incentives for experienced workers under the heading "Working in Old Age". Original plans, such as a 25 % flat tax, are therefore off the table.

The most important building block here is the "activity allowance" in the form of a tax-free allowance of €15,000 per year (€1,250 per month – this is particularly relevant when claimed during the year), which can be claimed under certain conditions for active earned income received in addition to or in place of a pension. Clearly, this requires reaching the statutory retirement age, and for the self-employed, entitlement to a retirement pension or a similar pension claim must exist. For so-called "supplemental earners," i.e., taxpayers who have already started drawing their pension and continue to be actively employed, a minimum number of insurance months must have been reached by the start of the pension, namely 480 insurance months for men and 408 insurance months for women (with an annual increase until 2033, so that from then on the same conditions as for men will apply). The income covered includes business and non-dependent income. In temporal terms, the activity allowance is intended to come into effect on 1 January 2027 and apply to income earned from that date onwards.

A further benefit of "working in old age" is that the employee's share of pension insurance contributions is to be abolished for those with supplemental earnings and for those who "postpone" retirement (people who do not retire upon reaching the standard retirement age). In contrast, the employer's share will remain. Similar provisions will apply to the self-employed who are insured under the GSVG, BSVG or FSVG. For them, the contribution rate is to be reduced in the same proportion as the employee's share of the total contribution rate.

Finally, resources freed up by abolishing previous provisions (e.g. special supplementary insurance contributions for pension recipients who are still employed) shall also flow into an employment market transformation fund for specific purposes and shall, in particular, serve to promote employment for older workers. Furthermore, counselling and support services are envisaged for sectors with a low employment rate for 60- to 64-year-olds.

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