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Germany Moves on Pension Reform as New Tax-Free Earn Rule Starts in 2026

A government commission will present pension reform options by mid-2026.

Overview

  • From January 1, 2026, retirees can earn up to €2,000 per month tax-free under the new Aktivrente, which functions as a tax bonus rather than a pension payment.
  • Key 2026 settings are set: the contribution rate stays at 18.6 percent, the contribution ceiling rises to €8,450 per month, and the annual pension adjustment is scheduled for July.
  • A Baden-Württemberg regional social court ruled that the pension insurer may withhold up to 50 percent of a monthly pension to recover overpayments if the subsistence minimum remains intact, though an added €12 fee in the case was deemed unlawful.
  • Debate intensifies over a "performance pension" tying retirement more closely to years of contributions, with figures in both government and opposition signaling openness while details await the commission’s review.
  • Financing ideas under discussion include shifting non-insurance obligations out of the pension fund and potentially levying contributions on capital gains and rental income, as fresh polling shows 79 percent worry their state pension will not suffice.