Background and Advantages of the Active Pension
The Active Pension is a prestige project of the federal government aimed at encouraging retirees to work longer. A major advantage is the possibility of earning up to 2,000 euros per month tax-free. This is intended to provide retirees with more financial freedom while simultaneously increasing the labor market participation of older individuals.
Potential Costs for the State
The German Institute for Economic Research (DIW) has expressed concerns that the Active Pension could cost the state more than it brings in if not enough retirees participate. The DIW study assumes that around 230,000 retirees who are already working would directly benefit from the tax bonus. Losses in tax revenue could amount to around 0.8 billion euros. To offset these losses, approximately 75,000 additional jobs would need to be created according to the DIW.
Impact on Private Investors and Savers
The Active Pension also impacts private investors and savers as it affects the financial conditions. For self-employed individuals, the benefit of the Active Pension strongly depends on their personal situation. While the tax-free additional income is advantageous, building additional pension entitlements through voluntary contributions might be less attractive for self-employed individuals not subject to compulsory insurance since private retirement savings alternatives like ETFs often provide better returns.
Conclusion
The Active Pension is a complex concept that can have both positive and negative effects on the state and retirees. While it offers retirees more financial freedom, it could potentially cost the state more than it brings if participation is insufficient. Private investors and savers must consider the impacts on pension policy and overall economic conditions.