Germany’s Federal Ministry of Finance has announced the launch of the ‘active pension’, which is designed to tackle the nation’s problems of an ageing population and a creaking pensions system.

As reported by Handelsblatt, Finance Minister Lars Klingbeil has introduced a bill that aligns with one from the Chancellery. Chancellor, Friedrich Merz, confirmed earlier this week that an agreement had been reached in principle.

Merz told Der Spiegel: "A few hours ago, we agreed to introduce the so-called active pension on 1 January 2026."

The ‘active pension’ (also known as the Aktivrente) is set to start at the beginning of next year. It will provide up to €2,000 a month to those who reach the statutory retirement age and continue to work voluntarily. Such an arrangement was made in the coalition agreement between the CDU and SPD parties earlier this year.

Included within the workings of the Aktivrente will be to make overtime bonuses tax-exempt as long as they do not exceed a quarter of the basic wage. It is understood that this will apply to all workers. The regulation will initially only apply to employees and not the self-employed.

It has been predicted by the government that around 25,000 workers will take advantage of the offer each year.

In addition, Die Zeit reported that incentives are to be created for part-time employees to increase their working hours. One-off bonus payments for increasing weekly working hours of up to €4,500 are to be exempt from tax.

According to Handelsblatt, the aim is to stem a shortage of skilled workers, keeping skilled employees within the labour market for as long as possible. The paper said that according to data from the Federal Statistical Office, around 13.4 million people in employment will have exceeded the statutory retirement age of 67 by 2039 and are expected to have retired from working life.

This corresponds to just under a third of the total labour force available to the labour market last year.

There has already been criticism.

As reported by Die Zeit, German Trade Union Confederation (DGB) member of the executive board and DGB Federal Executive Board chair, Anja Piel, said: "The regulation costs billions, but does not solve any of the existing problems."

Others were more incensed, seeing it as providing more to pensions with the cost being borne by younger generations.

As one commenter on Die Zeit wrote: “For my generation, unfortunately, it only means: higher social security amounts, high income taxes, high rents. Measures to close the pension gap? Nothing. Support to be able to buy a property or to be able to provide for it in other ways? Nothing. I'm really speechless; this country is going to go downhill.”

Such a move, the commenter said, will only draw more people into voting for the far-right AfD Party.

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