A new study from the German Institute for Economic Research (DIW Berlin) shows that older workers who receive the basic pension supplement are more likely to continue working than other pensioners. The basic pension was introduced to help older residents who spent many years in the workforce but ended up with low pension income. It aims to reduce the risk of poverty among long-contributing but low-paid retirees. According to the research, among pensioners aged roughly 63 to 74, approximately one in five basic-pension recipients remain in paid employment, compared with a lower share among pensioners without this supplement. Many continue working in small part-time roles (known in Germany as “mini-jobs”). The incentive to keep working is strongest among those who were already employed shortly before retirement; they are more likely to continue in some form of employment than those who stopped work before pension age. However, working retirees often face a trade-off: higher earnings may reduce or eliminate the supplement. The authors argue that the basic pension alone does not fully protect against low income in old age. Because many retirees work out of economic necessity, tax and earnings-allowance incentives could help. One proposal is to raise the income threshold below which work does not reduce pension entitlements. Such measures could support older workers who want to continue contributing, while avoiding significant losses in income support. In sum, the study suggests that many older Germans are willing and able to remain active in the labour market if the economic incentives are aligned; but persistent poverty risks require careful pension design and supportive labour policy. Source: DIW Berlin