Germany is set to implement an innovative 'Active Pension' scheme, allowing retirees to earn up to €2,000 per month tax-free while continuing to work. This initiative, expected to be approved by the federal cabinet, aims to address labor shortages in critical sectors like engineering and healthcare.
The plan is to come into effect on January 1, 2026, and it is projected that around 168,000 individuals will utilize this benefit. The anticipated cost to the federal and state governments is approximately €890 million annually.
Labor Minister Bärbel Bas has emphasized the importance of retaining experienced workers in the labor market, positioning this reform as an effective incentive. While the initiative aligns with the EU's broader goals of encouraging post-retirement work, it stands out due to its explicit financial benefits.
Critics, however, voice concerns about potential inequities arising from the tax advantages offered to retirees. Overall, the Active Pension scheme represents a significant shift in Germany's approach to aging workforce dynamics.
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