The government’s newly introduced “active retirement” scheme, allowing pensioners to earn €2,000 tax-free from the new year, is facing sharp criticism from leading economic advisors, who warn of limited benefits and potential legal challenges. Monika Schnitzer, head of the Council of Economic Experts, expressed skepticism regarding the policy’s efficacy, suggesting it’s more likely to generate “expensive piggybacking effects” than to significantly boost employment.
Schnitzer’s assessment, delivered to the “Rheinische Post”, highlights a key concern: many pensioners already engage in some form of continued work and the scheme will largely incentivize them to claim the tax benefits without substantial alteration to their working patterns. “I don’t expect the active retirement scheme to meaningfully increase employment” she stated.
Furthermore, Schnitzer anticipates legal action stemming from the current eligibility restrictions. The scheme is presently limited to individuals in social security-obligated employment, creating a clear disparity for self-employed individuals, who are almost certain to contest the discriminatory nature of the legislation. Expanding the scheme to include the self-employed, she warned, would trigger a “considerable cost increase” given the already prevalent tendency for older self-employed individuals to work beyond traditional retirement ages.
While critical of the active retirement scheme, Schnitzer voiced approval for the government’s plan to introduce a “early start pension” providing €10 per month for a savings account to individuals aged six to eighteen. She acknowledged this initiative directly reflects a proposal previously advanced by the Council of Economic Experts.
However, Schnitzer intensified her call for a more comprehensive overhaul of the retirement system, urging the government to mandate private pension provision. Her proposal includes an “opt-out” model, requiring individuals to actively reject participation rather than passively being enrolled. Schnitzer believes this approach would encourage earlier engagement with retirement planning, mitigating the long-term strain on the state pension system and fostering greater individual financial responsibility. The debate surrounding mandatory private provision underscores a growing tension between government intervention and individual autonomy in securing retirement income.
