Active pension: Earn tax-free and combat the shortage of skilled workers!

Active pension: Earn tax-free and combat the shortage of skilled workers!

Something is happening for older employees in Germany! On October 15, 2025, the Federal Cabinet decided to launch the long-awaited active pension. This new regulation is intended to enable people of retirement age to earn up to 2,000 euros tax-free - a measure that could not only improve the financial situation of pensioners, but also help in the fight against the shortage of skilled workers. Elke Bode, a 65-year-old German Red Cross domestic helper, currently works 30 hours a week and earns more than her pension. She sees the active pension as an opportunity to further ease the burden on her financial situation and emphasizes how important personal contacts with her customers are and that it is becoming increasingly difficult to find new colleagues. Thorben Goebel-Hansen, managing director for nursing and hospice in Hamburg-Harburg, emphasizes the great value of working pensioners for his company.

The active pension could be a real relief for many pensioners. According to current figures, only one in five pensioners is employed - a figure that the federal government considers to be far too low. An official start of the active pension is planned for January 1, 2026, after the draft law is approved by the cabinet and then discussed in the Bundestag and Bundesrat. Adjustments to the regulations are still possible until they are published in the Federal Law Gazette. This could particularly affect the federal funds earmarked for the implementation of the active pension, with additional annual costs of between 600 and 800 million euros being assumed.

Who benefits from the active pension?

The active pension is primarily intended for people who have reached the statutory retirement age and are in employment that is subject to social insurance contributions. This also includes self-employed people and freelancers who want to work beyond the age limit. However, employees who are in early retirement or receive a disability pension are excluded from the regulations. What is exciting is that it is controversial to what extent self-employed people can benefit from active pensions, as they in particular are often affected by unequal tax treatment.

A study by the German Institute for Economic Research (DIW) shows that the regulation primarily benefits higher-earning pensioners. The exclusion of the self-employed and the lack of benefits for low-earning pensioners are the subject of public discussion. Low-earning employees may be able to get little out of their active pension, while companies may employ older workers at low wages. There are also constitutional concerns as this could lead to inequality in the taxation of income. This raises questions about the fairness of the regulation and could also increase pressure for further necessary reforms.

Outlook and criticism

It remains to be seen how future discussions in the Bundestag about active pensions will go. The regulation will have to be monitored very closely because not only pensioners, but also companies and taxpayers will be affected by the financial impact. Active engagement by older workers could address the shortage of skilled workers, but it is unclear whether the financial relief that active pensions promise will actually reach those who urgently need it.

For many, this could still be a step in the right direction to make working in old age not only possible but also attractive. While many retirees rely on additional income, the active pension can potentially provide the necessary foundation to lead a fulfilling life even in old age. However, it can hardly be denied that a lot remains to be clarified before the final regulation is reached. The voices from politicians and those affected will be crucial in ensuring the acceptance of active pensions in broad sections of society.

For more information read the articles on ndr.de, buerger-geld.org and diw.de.