Information on the new active pension

The active pension has been in effect since January 1, 2026. To clarify: This is not a new type of pension, but a tax allowance for pensioners.

What exactly is behind it and who can use the active pension? "Continuing to work as a pensioner becomes financially very attractive thanks to the active pension," said Ronald Maul, President of the Saarland Chamber of Tax Consultants, in a press release.

What are the goals of the active pension?

With the introduction of the "active pension," the German government aims to provide a targeted incentive for older workers to remain employed even after reaching retirement age. This initiative is driven by demographic trends that will further exacerbate the skilled labor shortage in the coming years. Financial incentives for older employees are intended to retain their expertise within companies for longer. A higher employment rate among pensioners is expected to contribute to increased economic growth and boost government revenue.

Who can receive the active pension?

The active pension consists of an additional tax-free allowance of €24.000 per year, or €2.000 per month, which employees can receive starting in the month following their reaching the standard retirement age. The statutory retirement age was raised from 65 to 67 in 2008 – however, this increase is being implemented gradually over a transition period. For someone born in 1956, for example, the standard retirement age is 65 years and 10 months; for someone born in 1960, it is 66 years and 4 months. For everyone born after 1964, the retirement age is 67. Only those who remain employed after reaching their retirement age can claim the active pension. It is therefore not an option for individuals receiving an early retirement pension – even if it is a full retirement pension for those with particularly long contribution periods ("pension at 63"). Civil servants and self-employed individuals such as farmers, foresters, freelancers or tradespeople are also not entitled to the tax-free allowance.

What does the tax-free allowance apply to?

The tax-free allowance applies to both regular and one-off income from employment. It is taken into account in the monthly payroll calculation. The allowance does not apply to income in the form of waiting-period, retirement, widow's, and orphan's pensions, as well as other benefits and advantages from previous employment. It also does not apply to severance payments, back payments, or other benefits from the first employment relationship that relate to periods in which not all the requirements for receiving an active pension were met. Wage or salary components exceeding €2.000 per month are subject to normal taxation. The allowance can only be claimed for one employment relationship when calculating payroll tax. Whether it can be divided among multiple employers within the framework of income tax assessment is still unclear.

Further requirements

The work must be a job subject to social security contributions – a mini-job is not sufficient. Therefore, contributions to health and long-term care insurance must continue to be paid. Employers must also continue to pay contributions to statutory unemployment and pension insurance for employees who are actively retired – employees themselves are not required to do so. However, if they choose to continue contributing to the pension insurance scheme, they will accumulate further pension points, thus increasing their pension. This requires a written declaration to the employer. The waiver can only be declared with future effect and is binding for the duration of employment. It is also possible to defer retirement as long as one continues working. This can also increase one's future pension. Receiving a pension is not necessary for the tax-free allowance for active retirement. Simply exceeding the standard retirement age and being eligible for retirement is sufficient.

Conclusion and recommendation: Active pension 2026 Conclusion "For many employees of retirement age, however, continued employment is an attractive way to improve their finances. Tax advisors provide information about the tax and social security implications in each specific case, so that the decision for or against continued employment can be made on a sound basis."
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Source: Saarland Chamber of Tax Consultants