If seniors retire earlier than planned, they previously had to meet certain income limits if they had a part-time job. Otherwise there was a risk of pension cuts. That will soon no longer be the case.

Seniors who have not yet reached the regular retirement age should be able to earn unlimited additional income in the coming years without the early retirement pension being reduced. In the past two years, the additional earnings limit for early retirees was around 46,000 euros as part of a temporary special corona regulation.

Without the planned change in the law, it would automatically fall back to 6,300 euros per year on January 1, 2023. “Instead of extending the exemption from the Corona crisis, the limit will now finally be dropped,” says Daniela Karbe-Gessler from the Taxpayers’ Association. The Bundestag still has to approve the law, but according to Karbe-Gessler this is a mere formality.

There should also be significant improvements for recipients of a disability pension. In the case of a full disability pension, annual additional earnings of around EUR 17,800 should not be taken into account. In the future, the limit will be redefined annually and adjusted to the development of other social security limits, according to Karbe-Gessler.

Irrespective of the additional income limit, the additional income is taxable if the basic tax allowance is exceeded together with the pension. In any case, filing a tax return is mandatory. Karbe-Gessler advises that early retirees with a part-time job could also claim travel expenses or costs for work clothing and work equipment as income-related expenses.

Basically, people who have reached the statutory retirement age and are drawing an old-age pension may earn an unlimited amount of extra money – without their pension being reduced. This standard age limit varies depending on the year of birth. The age for regular retirement will be gradually raised to 67 by 2029.

The following applies until 2023: Until the standard retirement age is reached – i.e. the retirement age for the standard old-age pension – pensioners may earn a maximum of 6300 euros per calendar year without their pension being reduced. However, with the outbreak of the corona pandemic, the additional earnings limit was raised significantly. And this also applies to the year 2022. The increased earnings limit for early retirement pensions is a total of 46,060 euros.

Pensioners can earn up to this amount in addition to their pension in the calendar year without it being reduced. However, the increased amount does not apply to disability and survivor’s pensions. If the salary exceeds this or the previous additional income limit, only the excess amount is taken into account. This amount is then divided by 12 and credited at 40 percent to the monthly pension. Those affected will then only receive a partial pension, according to the German Pension Insurance Association in Berlin.

(This article was first published on Tuesday, November 15, 2022.)