Ampel is delaying the implementation of the new deferred pension contribution.
Amidst their efforts to tackle the workforce deficiency, the administration has consented to a pension delay reward. Regrettably, the rollout of this incentive has been delayed.
As per a cabinet draft by Federal Minister of Labor Hubertus Heil, the pension delay incentive, proposed by the traffic light coalition, will now commence on January 1, 2028, which is a year behind its initial schedule. This postponement is attributed to the "substantial IT expenses" necessary for implementation. Nevertheless, employment periods commencing from January 1, 2025, could potentially qualify for this pension delay reward.
This bonus remains exempt from taxes and is calculated based on the foregone pension and the cost savings accrued in health insurance contributions for the pension fund during the continued employment period. Based on calculations by the social organization VdK, an individual reaching a pension claim of about 1,600 euros gross at the typical retirement age, and continuing to work for an additional year at the average wage, could receive an approximate tax-free reward of around 22,000 euros.
An alternative is the opportunity to marginally enhance the monthly pension until the end of life by working longer. A one-year extension to the retirement age raises the pension by six percent and is also augmented due to continued contributions to the pension fund.
The coalition's additional tactics
In summary, the administration has introduced four strategies to reinforce incentives for work beyond retirement age via the bill. These methods were agreed upon as part of the so-called growth initiative, adopted by the cabinet on July 17. The government anticipates that these 49 measures across various sectors will stimulate the economy and promote economic growth.
Besides the pension delay reward, there's also a proposal for a wage hike, effectively, for employees who decide to continue working beyond the standard retirement age. Employers would be authorized to pay their unemployment and pension insurance contributions directly to retired employees. This could translate to a gross wage increase of 10.6 percent as early as July 1, 2025.
Furthermore, for the widow(er)s, employments will become more appealing. The monthly income threshold, up to which the survivor's pension is exempt from reduction, will be increased. Additionally, the prior employment ban for senior employees will be relaxed to enable the execution of a fixed-term employment contract without cause with the previous employer.
The pension delay incentive, proposed by the traffic light coalition's traffic lights coalition, originally intended to commence on January 1, 2027, but due to substantial IT expenses, has been postponed to January 1, 2028. The delay in the rollout of this incentive by the administration does not affect employment periods commencing from January 1, 2025, which could still qualify for the bonus.
