Retire earlier: This is how partial retirement affects your salary
Created: 06/22/2022, 08:25
By: Andrea Stettner
For those who are longing for retirement, partial retirement could be the right alternative.
However, you have to make compromises when it comes to salary.
(Iconic image) © Uwe Umstätter/Imago
Anyone who is tempted to retire early should think about partial retirement.
This model offers a number of advantages over normal part-time work.
The Partial Retirement Act (AltTZG) makes a smooth transition into retirement possible for employees.
The previous
weekly working hours will be reduced by half
.
Partial retirement lasts
at least three years
and must end when the pension begins.
Prerequisite: Who can go into semi-retirement?
If you want to apply for semi-retirement, you have to
be at least
55 years old
,
have been employed full-time or part-time for at least three years
in the last five years before the start of partial retirement
,
the partial retirement must last at least until the start of retirement,
earnings in semi-retirement must be over 450 euros per month.
Other conditions apply to early retirement.
The Partial Retirement Act does not specify exactly how working hours must be distributed.
A part-time or block model would be possible.
In contrast to the so-called early retirement, employees are employed until retirement, so the employer continues to pay the social security contributions over the entire period.
And it also offers other benefits in terms of salary.
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Partial retirement: What cuts do I have to make in terms of salary?
If you only work half as much, you usually get half as much salary.
However, this is different with partial retirement, as
Stiftung Warentest
explains in an article: “50 percent less work does not mean 50 percent less salary here.
Employees receive a top-
up amount of at least 20 percent
- regardless of whether the person has chosen the block model or reduced their working hours by 50 percent throughout.
Some collective agreements are even more generous.”
The salary will be taxed as usual in semi-retirement.
However , the
top-up amount is exempt from tax and social security contributions
, but is subject to the progression clause.
In addition, according to the Federal Ministry of Labor and Social Affairs, the employer is obliged to pay
at least 80 percent of
the employee's previous pension insurance contributions.
Nevertheless, the salary is of course lower than full-time.
And that can also have an effect on the pension after partial retirement.
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