German Retirees Can Earn £1,750 Tax-Free Under New Active Pension Scheme

Starting January, Germans who continue working past the statutory retirement age of 67 will be able to earn up to £1,750 (€2,000) a month tax-free on top of their pensions. The “Aktivrente” or active pension scheme is part of Chancellor Friedrich Merz’s “autumn of reforms” aimed at boosting economic growth and addressing labour shortages.
The scheme targets employees in social security-contributing jobs, while excluding civil servants, tradespeople, self-employed, and agricultural workers. Both employers and employees will still pay social security contributions on these earnings, helping to support Germany’s pension and health systems.
The government expects the measure to retain experienced workers, raise employment rates, and stimulate economic growth. Critics argue it creates unequal tax treatment compared with other types of income, but authorities stress the long-term benefits could outweigh initial tax revenue losses, estimated at £785m–£1.7bn annually.
The initiative also aims to enhance the social standing and well-being of older workers, encouraging those who enjoy their work and remain fit to remain active in the labour market.