The government’s proposed “active retirement” scheme is facing sharp criticism from both employer associations and trade unions. Steffen Kampeter, Managing Director of the Confederation of German Employers’ Associations (BDA), told the Redaktionsnetzwerk Deutschland (Sunday editions) that the plan, intended to incentivize longer working periods, simultaneously rewards early retirement through a tax-free allowance. He stated that the policy creates “a push and pull effect” rendering it ineffective in its incentive structure and creating significant financial burdens for contributors and taxpayers.
Anja Piel, board member of the German Trade Union Confederation (DGB) and President of the German Pension Insurance Fund, echoed this sentiment, asserting that the initiative will cost billions without addressing existing issues. She attributed the reluctance of individuals to continue working after retirement to factors such as health concerns, challenging work environments, or lack of employer willingness to retain them.
Piel proposed alternative solutions focused on broader societal benefits, suggesting targeted measures such as improved working conditions to ensure people can remain healthy until age 65, the creation of age-appropriate job roles and facilitating pathways for women transitioning from involuntary part-time employment. She emphasized that these actions would provide a more effective response to demographic shifts.
The government’s proposal outlines plans to allow retirees to earn €2,000 per month or €24,000 annually without incurring taxes. Chancellor Friedrich Merz has indicated a target date for the introduction of the active retirement scheme at the beginning of 2026.
