This is how the new active pension in 2026 works.

The new active pension scheme is now in place. Here's who can earn an additional €2.000 tax-free, who is excluded, and what employers and pensioners need to know.

Those who have reached retirement age but still wish to continue working can now benefit from the new active pension. The instrument is also intended to support employers facing skilled labor shortages. Pensioners can now Up to €2.000 per month tax-free Earn extra money. That amounts to 24.000 euros per year.  

Who is eligible for the active pension?

The active pension only applies to employees subject to social security contributions upon reaching the standard retirement age (completion of the 67th year of age, including transitional provisions for those born up to 1963). Specifically... from the month following the reaching of the standard retirement age.

"The aim of this amendment is to exclusively benefit those employees who actually continue working after reaching the standard retirement age," reports the ZDH. At the same time, the complex division of income into taxable and tax-free portions during the transition month is eliminated.

For whom does the active pension not apply?

Self-employed individuals are excluded from the tax exemption, which business associations such as the Central Association of German Crafts (ZDH) criticize. Also excluded are farmers and foresters, mini-jobbers, civil servants and so-called existing early retirees*.

Early retirees (early retirement pension) can only benefit from the tax bonus once they have reached the standard retirement age.

What does tax exemption mean?

Additional income of up to €2.000 per month is tax-free. Anyone earning more than €2.000 must pay taxes on the amount exceeding this limit. However, contributions to health and long-term care insurance must still be paid. 

• Contributions to health and long-term care insurance (employees)
• Employer contributions to pension and unemployment insurance

Regular pensions remain taxable as before. However, tax-free income is not subject to the progression clause. It does not increase the tax rate for the remaining income. 

Are retirees allowed to continue working for their former employer?

It is often stipulated at the start of employment that the contract automatically terminates upon retirement. If no such provision exists, everything continues as before.

Postponement agreement: If the contract contains a clause stipulating that the employment relationship ends upon reaching the standard retirement age, then employers and employees can agree before retirement to postpone the termination date. The legal basis for this is... Section 41 sentence 3 SGB VIThe works council may need to be involved. The postponement agreement can be repeated several times. 

Attention: If there is no termination clause, the employment relationship continues indefinitely. "In this case, the employment relationship only ends when both parties terminate the contract or when there is a notice of termination. It therefore does not end automatically with the start of retirement. In that case, Section 41 Sentence 3 of the German Social Code, Book VI (SGB VI) cannot be applied," explains the [source/expert]. Chamber of Crafts East Mecklenburg-Western Pomerania.

Please note the written form requirement: The agreement on the extension must Signed by both parties in their own hand will be, and the employee must receive the original.  

Are pensioners allowed to return to their former employer?

If you decide to return to your former employer only after retirement – ​​for example, because of the new active pension scheme – then a new contract must be concluded. This also applies if you start working for a different company. 

And: "From an employment law perspective, this is a new hire," reports the Technician health insurance"That means the general regulations on fixed-term contracts must be observed. This means that..." Fixed-term contracts are only possible under certain conditions., such as for objective reasons according to § 14 TzBfG"The receipt of an old-age pension alone is not a valid reason for a fixed-term employment contract," ruled the Federal Labor Court.

What is the goal of the active pension?

The draft law on active pensions states: "Active pensions offer an incentive to..." To better utilize the employment potential of older people, by reducing the tax pressure on earnings in old age and making continued work beyond the standard retirement age more attractive. Furthermore, this helps to staff shortages to defuse many areas and Experience knowledge to keep them in the companies for longer." The Federal Government assumes that around 168.000 people will make use of the active pension.

What are the criticisms of the active pension?

While the active pension scheme enjoys widespread support, the new tax bonus has also drawn considerable criticism. Firstly, it is criticized for the unequal treatment of individuals such as the self-employed or those in marginal employment, who are not included (keyword: principle of equal treatment). Secondly, it is argued that the instrument will result in lower tax revenues. Younger workers would therefore be indirectly burdened.

Furthermore, it is noted that the active pension may primarily benefit people who previously belonged to the higher earners. Tradespeople or caregivers, i.e., people with physically demanding jobs, often cannot work longer, even if they wanted to, according to various critics.

The law is to be reviewed after two years.

*Editor's note: An earlier version of this article incorrectly stated that freelancers were excluded; this has been corrected. We apologize for the error. 

Sources: Federal Government; Techniker Krankenkasse; HWK OMV; DHB

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