The employment of older employees and the transition to retirement are matters that are once again keeping the legislator busy in the current legislative period. Following the introduction of, inter alia, the so-called mothers’ pension and the pension for particularly long-term insured persons with the German Act to Improve Benefits in the Statutory Pension System [Gesetz über Leistungsverbesserungen in der gesetzlichen Rentenversicherung (RV-Leistungsverbesserungsgesetz)] which entered into force on 1 July 2014, the Federal Cabinet resolved on 14 September 2016 the draft bill to increase the flexibility of the transition from occupational life to retirement and to strengthen prevention and rehabilitation during occupational life (Flexi-Pension Act [Flexirentengesetz – FlexiG]). Now to be promoted in particular is the employment of older employees who are also at retirement age.
The key aspects of the draft are as follows:
- Now that the amendment of Sec. 41 SGB VI through the RV-Leistungsverbesserungsgesetz has made it possible for the time of the end of an employment contract limited to the regular retirement age to be pushed forward several times, the employment of employees beyond the regular age limit is now to be made more attractive for employers through the discontinuation of contributions towards unemployment benefit.
- For employees, the partial pension is to be structured in a far more advantageous way. Employees will be automatically entitled to earn an additional amount of EUR 6,300 per calendar year. Any excess amount will lead to the partial pension, albeit that this will no longer be oriented on inflexible boundaries in future. The additional earnings will still be capped, however. Any additional earnings generated during retirement could also lead to higher pensions in future for the employee. .
- In cases of planned early retirement, which generally lead to pension cuts, employees will in future already be able as of age 50, as opposed to age 55, to compensate for the pension deductions by making additional pension contributions.
The draft bill also contains further provisions on rehabilitation and participation. The Federal Government wishes to conclude the legislative process in the near future and have the Act partially enter into force as of 1 January 2017.
From the employer’s perspective, various aspects of the statutory amendments to the pension insurance will have to be considered. Amongst other things, employers will have to check whether the Act will have effects upon the regulations governing company retirement pensions, pre-retirement part-time work or any other regulations connected with pension insurance age limits. Future social plans will also have to consider whether regulations for employees nearing retirement age will necessarily have to envisage compensation for the pension deductions, for the legislator is evidently increasingly viewing pension reductions as a disadvantage.