(de-news.net) – The German Federal Government has officially initiated the legislative process for the proposed Aktivrente pension reform, which aims to incentivize voluntary employment beyond the statutory retirement threshold. As confirmed by the Federal Ministry of Finance, the Federal Cabinet approved the corresponding draft legislation on Wednesday, marking a significant step forward.
Under the proposed framework, socially insured employees who continue working after reaching the standard retirement age of 67 will be eligible for a monthly income tax exemption of up to 2,000 euros. This fiscal benefit is designed to encourage older workers to remain in the labor force and applies irrespective of whether the individual has begun drawing a pension or has opted to defer it. However, the measure explicitly excludes civil servants, self-employed individuals, marginal part-time workers, and those employed in agriculture and forestry. According to government estimates, approximately 168,000 individuals stand to benefit from the reform, which is projected to reduce the tax burden on pensioners by up to €890 million annually.
Federal Minister of Finance Lars Klingbeil (SPD) emphasized the broader economic rationale behind the reform, stating, “By enabling experienced professionals to remain active in the workforce, we are creating new momentum for sustainable economic growth.” Federal Minister for Economic Affairs Reiche echoed this sentiment, describing the initiative as a constructive measure to facilitate continued employment in later life and to retain valuable expertise within companies.
Despite broad governmental backing, the Aktivrente proposal has drawn criticism from key social and economic actors. Eva Maria Welskop-Deffaa, President of Caritas Germany, warned that the tax exemption may deepen generational imbalances, especially for younger families facing full taxation. The German Social Association (VdK) added that many working retirees — particularly the self-employed and marginal workers — would be excluded from the benefit.
Steffen Kampeter, CEO of the Confederation of German Employers’ Associations (BDA), highlighted contradictions in policy, noting that early retirement incentives undermine efforts to extend employment. Gundula Roßbach Piel, President of the German Federal Pension Insurance, cautioned that the reform could be costly and fail to address core obstacles such as health, job conditions, and employer willingness.
The legislative proposal will now proceed to deliberation in both the Bundestag and the Bundesrat. If approved, the Aktivrente is scheduled to come into force on 1 January 2026.
