The Federal Cabinet has launched plans for a new bonus for people who want to work beyond retirement age. Employees already increase their future pension payments if they work beyond the regular retirement age. In the future, however, there will also be the option of To have entitlements paid out in one go – in the form of a so-called pension deferral premium. The plan is part of the “growth initiative” agreed by the traffic light coalition in July and must now be discussed and approved in the Bundestag.
The bonus is to be tax-free and is based on the amount of the lost pension and the health insurance contributions that the pension fund saves for the period of continued employment for those affected. According to calculations by the social association VdK, someone who has achieved a gross pension entitlement of around 1,600 euros by the time they reach the standard retirement age and then continues to work for a year at the average wage could receive a tax-free payment of around 22,000 euros.
As an alternative to such a one-off payment, however, there is still the possibility of to increase the monthly pension until the end of life by working longerIf the start of retirement is postponed by a year, the old-age pension increases by six percent. It also increases because contributions to the pension fund continue to be paid. According to a recently published survey by the career network Xing, more than half of employees aged 50 and over can imagine working beyond retirement age.
Another new regulation introduced by the cabinet provides that employers can pay the unemployment and pension insurance contributions that they pay for employees of retirement age directly to them. The idea is that this will not only increase their income, but also the incentive to stay in the job longer. If employers do not pay the amounts to employees, they are still obliged to pay the employer contributions to the unemployment and pension funds.
Heil and Habeck emphasise contribution to securing skilled workers
“Anyone who wants to continue to contribute their knowledge and skills voluntarily will benefit from the new regulations. This is an important step to secure experienced specialists for our economy,” said Federal Labor Minister Hubertus Heil (SPD) in Berlin. His cabinet colleague, Federal Economics Minister Robert Habeck (Greens), said: “The measures adopted are important for Germany’s economic development due to the ongoing demographic change, because we cannot do without the knowledge, skills and experience of older people who still want to continue working.”
More about pensions at Tagesspiegel Plus:
Tax incentives for foreign skilled workers How other countries attract highly qualified immigrants More net income, more from life How to go part-time cleverly 40,000 departures by 2033 A wave of retirements hits Berlin’s administration – and the part-time rate is growing
