While Spain has been in a pension sustainability crisis for years, the German government has decided that the best way to retain senior talent is to make staying active a profitable business. Through the Active (active pension), allows you to earn up to 2,000 euros per month tax-free.
More net money every month
Since January 1, 2026, any German citizen who reaches the legal retirement age (set at around 67 years) and voluntarily decides to continue working enjoys a unique tax privilege.
The first 2,000 euros per month of your salary are completely exempt from income tax. This makes the senior worker a profile with very high purchasing power, since he receives his usual pension and, in addition, has an almost full net salary.
Although the worker must continue paying his or her share of health and citizen insurance, the incentive is so powerful that working one more month translates into direct and visible money in the pocket, unlike the Spanish model that focuses on increasing the future pension.
Spain and Germany: two formulas for the same challenge
The comparison between both countries reveals totally opposite strategies to resolve the lack of labor and guarantee that the system does not go bankrupt. While the Spanish model focuses on delaying exit from the system to save costs, offering in exchange a ‘single check’, Germany prefers to encourage retirees to continue contributing their talent to the labor market through an immediate tax exemption on their salary.
This difference is also noticeable in the health of public accounts. Spain relies its medium-term sustainability on tax increases and new quotas such as the Intergenerational Equity Mechanism (MEI).
On the contrary, Germany has decided to rely on the profitability of financial markets, creating public investment funds on the stock market to generate the income that the pay-as-you-go system can no longer cover on its own.
And by transforming retirement into an attractive and flexible transition, Germany is ensuring that its seniors continue to inject money into the real economy and contribute their experience. Meanwhile, in Spain, although public pensions are more generous with respect to the last salary, the lack of direct incentives for active workers continues to be one of the pending issues for the Government.