A proposed tax incentive for retirees in the fight against the skilled labor shortage, as planned by the black-red federal government, may not yield the expected benefits, a study by the German Institute for Economic Research (DIW) suggests.
According to the study, the so-called active pension would benefit directly 230,000 retirees who are already working, primarily high-income earners and could result in a loss of around 0.8 billion euros in tax revenues. However, the DIW estimates that if the active pension were to create an additional 75,000 jobs, this could offset the revenue losses.
The German central bank expressed skepticism on Tuesday about the active pension’s ability to motivate many retirees to continue working.
CDU General Secretary Carsten Linnemann, the creator of the active pension, defended his concept, stating that the active pension is a completely new idea and that all previous studies are based on assumptions. He emphasized the potential of the active pension, saying that the 2,000 euros per month in tax-free income is a strong incentive for retirees to continue working. Linnemann refused to discuss the potential negative effects of the active pension, instead focusing on the recognition of the performance of those already working in retirement.