Flexirente: What did the law actually achieve?

“It will Additional earnings limit exceeded, you are entitled to a partial pension. The partial pension is calculated by deducting 40 percent of the amount exceeding the additional earnings limit from the full pension…” (Section 34 Para. 3 SGB VI, deleted since 2023)

By 2035, around seven million skilled workers will disappear from the labor market. The baby boomers are retiring and leaving a huge gap. In order to encourage them to work longer, the traffic light government removed the additional income limits at the beginning of 2023. Anyone who retires early but continues to work in a part-time job can now earn as much extra as they want without having their pension reduced. He just has to pay taxes. A breakthrough in a rigid system that previously discouraged pensioners from working too much.

Until July 2017, there were monthly additional income limits; Anyone who exceeded this had to accept massive pension cuts. The regulation was then gradually relaxed (Flexirentengesetz). Recipients of an early retirement pension were able to earn up to 6,300 euros annually without any deductions. Higher additional earnings were only credited to 40 percent of the pension. Pensioners who continue to work after reaching the standard retirement age can continue to make voluntary pension contributions. For every month worked after the age limit, they receive a pension benefit increased by 0.5 percent – i.e. six percent more pension per year. The Flexi Pension Act has “significantly increased the attractiveness of continuing to work while receiving a pension,” according to the German Pension Insurance.

However, the effect has so far been manageable: the number of flexi pensioners has increased slightly since 2018, by around 40,000 among early retirees to 245,000 in 2022, while the number among regular pensioners rose by 81,286. In total, around 1.4 million people received a partial pension in 2022 and worked part-time, according to pension insurance figures. However, given that there are over 20 million pensioners in Germany, this is a piece of cake.

It is questionable whether the abolition of the additional earnings limit in 2023 will boost the flexible pension; No figures are available yet. The traffic light wanted to further sweeten the pension delay and offers 22,000 euros from the state for every year you work longer. Anyone who retires at 70 instead of 67 should receive 66,000 euros in one go – paid by the German pension insurance. The employer camp, however, is promoting a different solution: “Before creating incentives for people to stay in working life for longer, all incentives for early retirement should first be ended.”