Enhanced incentive to motivate individuals to continue working past their retirement period
The Federal Government has proposed a fresh incentive for individuals planning to work past their retirement years. At present, employees have the option to enhance their future pension earnings by carrying on work beyond the standard retirement age. In times to come, this choices will also encompass the option of receiving these benefits as a single payment - in essence, a so-called retirement postponement bonus.
Working an additional year and pocketing a €22,000 bonus. This incentive is proposed to be free from taxes and will be determined based on the pension amount that would have been disbursed and the health insurance premiums that the pension fund would have saved during the extension of employment period. As per estimations by the social welfare organization VdK, an individual who has secured a pension entitlement of roughly €1,600 gross by the time they reach the regular retirement age, and then works for another year at the average wage could receive a tax-free lump sum of approximately €22,000.
Either a one-time payment or a permanently elevated pension. However, as an alternative to this one-time payment, there is also the option of augmenting the monthly pension for lifetime by continuing to work. Delaying retirement by a year raises the old-age pension by six percent. Furthermore, this increase is amplified due to ongoing contributions to the pension fund. As per recent statistics by the career platform Xing, over half of the employees aged 50 and above can visualize working beyond their retirement age.
Human beings who choose to work beyond their retirement age could potentially receive a tax-free bonus of €22,000. This incentive also offers the possibility for some individuals to permanently increase their pension by continuing to work.
