Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/320383 
Year of Publication: 
2025
Citation: 
[Journal:] DIW Weekly Report [ISSN:] 2568-7697 [Volume:] 15 [Issue:] 25/26 [Year:] 2025 [Pages:] 143-150
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The new German federal government coalition is planning a significant tax break for workers of retirement age: the active pension (Aktivrente). With the active pension, workers who have reached the statutory retirement age may earn up to 2,000 euros a month tax-free, a move that the government is hoping will motivate more pensioners to work longer to counteract the skilled worker shortage. Microsimulation analyses using Socio-Economic Panel (SOEP) data show that at first, around 230,000 pensioners would benefit from the active pension, especially those with higher incomes. This would initially result in annual tax revenue losses of 800 million euros and uncertain employment effects. If 75,000 additional pensioners started working, these revenue losses could be offset by additional revenue from their taxes and contributions. Although including the self-employed in the active pension would result in more free-rider effects, excluding them is unfeasible, as tax treatment between the two groups would be too unfair.
Subjects: 
Tax benefits for older employees
incentives to work
revenue and distribution effects
JEL: 
J31
J16
J22
Persistent Identifier of the first edition: 
Document Type: 
Article

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