How to continue working as a retired person : Tips – More and more retirees continue to work in retirement to improve their financial situation. But many wonder whether they are allowed to work at all as a pensioner and how this will affect their pension. In Germany, there are no legal prohibitions on retirees wanting to work. However, retirees must follow some rules to avoid jeopardizing their pension entitlement.
How to continue working as a pensioner : tips.
Do you have to continue paying contributions to the pension insurance?
And from when does this increase your pension?
There are some differences here between the periods before and after you reach your standard retirement age.
Since January 1, 2023, there are no longer any additional earnings limits for early retirement pensions. You can now earn as much additional income as you like.
Previously, an additional earnings limit of 6,300 euros per year applied to early retirement pensions. In the last three years, this limit has already been raised sharply due to the Corona pandemic. Now it has been abolished altogether. The so-called supplementary earnings cap, the previous maximum limit for your supplementary earnings, also no longer exists.
You can now make your transition from working life to retirement completely flexible. It is therefore possible to draw two incomes – your pension and your pay – side by side. If you meet the requirements for an early retirement pension, you can simply submit an application.
This new regulation applies equally to both the new and the old federal states. It also applies if your old-age pension already started before 2023.
The early retirement pensions include
the old-age pension for those insured for many years,
the old-age pension for those insured for a particularly long period, and
the old-age pension for severely disabled persons.
You can now earn as much as you want on top of your pension without jeopardizing your pension entitlement. Previously, this regulation only applied once you reached the standard retirement age. You can read more about when this limit is reached and what the consequences are in the chapter « Working beyond the standard retirement age ».
Until you reach this limit, you are still required to pay pension insurance contributions for your employment. You will therefore continue to pay pension insurance contributions. All contributions paid between the start of your early retirement pension and reaching the standard retirement age will be taken into account in your pension once you have reached the standard retirement age.
Pay attention to the deductions
When you can claim an early retirement pension depends not only on whether you have met the relevant requirements, but also on whether you have reached the required age. The age limits increase for all early retirement pensions. However, there is the option of claiming these pensions earlier in the case of the old-age pension for those insured for many years and the old-age pension for severely disabled persons – but then with deductions.
Please note:
Once you have decided to claim an old-age pension with deductions, these deductions will remain for the rest of your life.
Please take this into account if you are thinking about taking an early retirement pension with deductions and working on the side. This is because these deductions will remain even if you stop working at some point and the additional earnings cease.
However, it is possible to compensate for the deductions. If you have reached the age of 50, you can – if you have fulfilled the requirements for this – pay additional contributions into the pension insurance. Then you may receive the full pension right away.
Please note:
You can read about how to offset your pension deductions in the brochure « Flexible retirement ».
Thinking about taxes
If you work alongside your pension, you will naturally increase your income. The employer withholds the taxes that accrue on your employment right away. With pensions, it’s a different story. Here, health and long-term care insurance contributions are usually withheld from the pension, but taxes are not. And since the additional pension increases your total income, you often have to pay higher taxes as well. This means that you have to file a tax return once a year. Our brochure « Insured persons and pensioners: Information on Tax Law » provides an overview of the topic. Please note, however, that only the tax authorities, income tax assistance associations or tax consultants can and may provide more detailed information on tax law.
Working beyond the standard retirement age
You have reached your standard retirement age and still want to continue working? If so, you can now earn an unlimited amount of additional income and there are advantages with your pension. If you continue to pay contributions, you will increase your pension once a year. If you postpone the start of your pension, you will receive supplements.
The standard retirement age marks the point in time from which you have fulfilled the requirements for a standard retirement pension. For insured persons born after December 31, 1947, the standard retirement age is gradually raised from 65 to 67. For example, if you were born in 1958 and celebrate your 65th birthday in 2023, you will reach the standard retirement age at age 66. After that, it increases by two months for each additional birth cohort. Anyone born in 1964 or later will not reach it until age 67.
Working alongside the standard old-age pension
Regardless of whether you have already drawn an old-age pension before or are only now claiming your pension: Once you reach the standard retirement age, you are generally exempt from insurance. You no longer have to pay pension insurance contributions yourself. Your employer does, but these contributions have no influence on your pension amount. However, you can declare to your employer that you wish to waive the exemption from insurance and continue to pay your own pension insurance contributions. Once a year, your pension will then be increased, not only by your own contributions, but also by those of your employer.
Unlimited employment contract until reaching the standard retirement age Did you conclude an unlimited employment contract with your employer at the time that already stipulated that the employment relationship would end when you reached the standard retirement age? 14 No problem. You can still decide to continue working now. Together with your employer, you can set a new fixed-term date and postpone it – even several times – beyond the start of your pension. Retire later If you take your standard retirement pension later and continue to work for a while, this has advantages for you: for every month that you continue to work beyond the standard retirement age and do not draw a pension, there is a pension supplement of 0.5 percent. So if you postpone your pension by one year, you will receive a supplement of 6 percent for this alone. In addition, your pension will be increased by the ongoing payment of pension insurance contributions. You no longer have to pay contributions to unemployment insurance.
How to continue working as a pensioner : tips and guidance
How do seniors benefit from salary sponsorship ?
Seniors are very popular profiles among umbrella companies / EOR, as they have great expertise and a solid experience. Independents can not only earn money several times over, but also end their careers with more flexibility, as they can set their own assignments and prices.
A senior carrier contract means a high degree of autonomy. Retired executives can offer their expertise to all types of businesses. In addition, they are supported in the financial and administrative management of their activities. Sponsorship is also an opportunity for companies whose employees are retiring but whose expertise is still needed during a transition period.