Economy praises lump-sum payment for longer work
Pension deferral bonus sounds complicated. It means that employees who retire later than planned receive a lump-sum payment. The idea of a coalition government in the economy is well received - if the concrete implementation is acceptable.
The plans of the Federal Government to keep older employees longer in employment using a lump-sum payment have been welcomed by economic representatives. "Additional financial incentives for employees is an important step," said Achim Dercks, deputy managing director of the German Industry and Trade Chamber (DIHK), to the newspapers of the Funke Media Group. In the implementation of the so-called pension deferral bonus, it is important that no bureaucratic or financial burdens are associated with businesses. The goal of keeping more Elderly over the retirement age in employment is "spot on," according to Dercks.
The Federal Association of German Employers' Associations (BDA) also holds the basic idea in high regard. This bonus could be an incentive to work longer and retire later. "The financial advantage is immediately noticeable," the organization stated in response to an inquiry. However, the concrete implementation is important. It is important that the planned premium is calculated tax-neutrally and does not burden the contribution payers additionally.
Martin Werding, an economist, expressed skepticism. He does not expect "massive effects" from the premium. The widespread desire for early retirement cannot be easily influenced, according to Werding. At the same time, he conceded: "The existing supplements of six percent for each additional earning year after the age limit are hardly used in practice. The idea of bundling these supplements in a one-time pension deferral bonus is therefore interesting. This makes the increased pension claims much more visible."
Financially speaking, the pension deferral bonus could be calculated quickly, Werding continued. "If it corresponds to the additional pension claims through the existing supplements, it could amount to around 20,000 euros for standard pensioners if they work an additional year," he explained.
Pension deferral bonus already exists
The Social Welfare Association Germany (SoVD) welcomed the plans. In the lump-sum payment, the interest group sees a "nice additional regulation" and an "interesting incentive to perhaps push back the retirement date a little." "The incentive can lie in the fact that, for example, after a year of additional work, there is more money for a new roof or a longer trip. However, the prerequisite is that people are healthy and fit enough to work," said Michaela Engelmeier, chairwoman of the SoVD, to the Funke Media Group.
As part of their growth initiative, the coalition leaders also agreed on a so-called pension deferral bonus. Who works longer and defers the retirement age, can receive the foregone pension contributions and pension payments to the health insurance tax-free. The possibility of a lump-sum payment is planned as an addition to the existing pension flexibility. With this option, people who defer their retirement receive an increased pension benefit of 0.5 percent for each month worked after the age limit.
Creating incentives to keep older people in the job is particularly important because in the coming years, the birth-rich generations from the Babyboomer generation will retire. According to the Microcensus 2021, 12.9 million earning persons will have surpassed the retirement age by 2036. In relation to the report year 2021, this corresponds to nearly 30 percent of the labor market's available earning persons, according to the Federal Statistical Office.
- The Traffic Coalition has proposed integrating the pension deferral bonus into pension politics, aiming to encourage an extended workforce and mitigate the impacts of the demographic change on the German economy.
- The German Pension Insurance has been part of the ongoing discussions regarding the pension deferral bonus, emphasizing the importance of addressing concerns from both businesses and employees, represented by the Federal Association of German Employers' Associations and German Industries Association, respectively.
- Rent prices and their impact on older individuals considering continuing work past retirement age have been raised as a concern by some stakeholders within the Social Union Germany, advocating for comprehensive solutions addressing both financial and lifestyle considerations.
- In response to the demographic change, German Industries Association has suggested a close collaboration between the government and different associations, such as the Federal Association of German Employers' Associations and Traffic Coalition, to facilitate the implementation of effective pension policies, including the pension deferral bonus.
