Pension and additional earnings: what changes from 2027

A little-noticed reform is adjusting a sensitive lever: people who draw a pension and want to keep working will face much tighter limits on additional earnings. The new rules, tucked away in a social budget, take effect on 1 January 2027 and apply to everyone seeking to supplement their income through work before their 67th birthday.

What will fundamentally change in 2027

The reform reshapes the so-called combination of work and pension, meaning the option to receive a pension while continuing in employment. Authorities aim to streamline the rules, prevent abuse and curb public spending.

From 2027, the appeal of earning alongside a pension will depend almost entirely on age – with people under 67 hit particularly hard.

The changes focus on three age bands:

• Under 64: Pension payments and earnings from work will be almost entirely offset against one another.
• Aged 64 to 67: Additional earnings will remain possible, but will be substantially reduced once a set amount is exceeded.
• From 67: Pension and employment can once again be combined freely, without a cap.

Officially, the reform is intended to provide “greater clarity” and support pensioners on low incomes. In practice, it will be particularly costly for people in their mid-sixties who are still fit, want to work and need a mini-job or part-time role to ease pressure on their household budget.

Before 64: working will barely pay financially

The most severe change affects people who receive a pension and keep working before reaching 64. Until now, a side job could generate genuine additional income. Under the new arrangements, the calculation will become much stricter.

Every euro earned in addition by a pensioner under 64 may be deducted from their pension payment by the same amount.

A simple example illustrates the day-to-day effect:

• Monthly pension: €2,000
• Earnings from work: €500
• New rule: the pension fund reduces the pension by exactly €500.
• Total paid into the account: still €2,000 – despite the side job.

This virtually removes the financial incentive. Before 64, work would then offer only non-financial benefits: contact with colleagues, a daily routine and the sense of being “needed”. Anyone trying to maintain their standard of living would gain very little from officially declared additional earnings before 64.

Policy-makers intend to steer those affected more firmly towards a phased transition into retirement, such as arrangements in which working hours gradually fall while pension payments gradually rise. For many people who simply want to close a gap in their finances, however, that offers little comfort.

Ages 64 to 67: partial additional earnings, but a painful cap

Between 64 and 67, combining a job with a pension will still be allowed, but the state will tighten the controls. This period is intended for people who are already retired but have not yet reached the age at which they can receive their full pension without reductions.

The basic principle is that people who work may earn some additional income. Once a specified annual amount is exceeded, the pension fund will reduce part of the excess.

Age	Rules for additional earnings
64–67 years	Tax-free allowance, then a pension reduction of 50% of the excess amount

A threshold of around €7,000 in taxable additional annual earnings has been suggested as a guide, although the exact figure is to be set by regulation. Anyone earning above that level will feel the effect sharply.

A practical calculation example:

• Additional earnings from work: €9,000 a year
• Proposed threshold: €7,000
• Excess: €2,000
• Reduction in pension: 50% of the excess = €1,000

The person concerned would still retain a real benefit from working, but would lose part of the additional income back to the pension fund. This is where the issue becomes emotional: many people in this age group already regard themselves as “properly” retired and see such deductions as a penalty for making the effort.

Why the state is taking this approach

The official justification is that the combined model should once again be more closely targeted at supporting “modest pensions”. At the same time, the reform is expected to save billions over several years. Less attractive rules for additional earnings ultimately mean lower total public spending.

Critics argue that the system has worked well for many people until now. Those who continue working after retirement do so precisely to preserve their usual standard of living – not to enrich themselves.

From 67: unrestricted additional earnings return, with side effects

Once people reach their 67th birthday, the situation becomes considerably easier. A more liberal approach applies again: pension and work can be combined freely, with no income limits or waiting periods.

From 67, pensioners can again earn unlimited additional income – without reductions and without a blocking period.

This is particularly relevant for people who want to remain in employment after the official retirement age, or who wish to top up their income with mini-jobs and part-time contracts. The previously required six-month gap in some cases before returning to a former employer will no longer apply.

Given the shortage of skilled workers, the signal sounds encouraging: older people stay in work for longer, businesses retain experience and pensioners strengthen their household finances. The question, however, is how many people will genuinely remain healthy and motivated enough to do so until 67.

Could undeclared work increase in retirement?

One issue concerns experts in particular: the possibility of a rise in unregistered side jobs. Anyone who sees officially declared additional earnings immediately affecting their pension may be tempted to arrange work “outside the tax system”.

Typical examples include:

• Repairs and trade work “for cash”
• Domestic help and care services without registration
• Tutoring, support or driving services provided without an invoice

That would produce exactly the opposite of the intended outcome. Instead of secure employment with deductions and contributions, more work could move into the hidden economy. This would affect not only social security funds, but also the workers themselves, who would be working without protection.

What future pensioners should consider now

Anyone currently in their early or mid-fifties is already setting the course for retirement. The new rules from 2027 will fall precisely in the period when many people intend to reduce their working hours or leave employment.

Useful steps may include:

• Requesting an early pension statement from the relevant fund and checking when entitlement begins and at what level.
• Modelling how a later pension start date and a longer working life would affect monthly payments.
• Building up a financial reserve so that additional earnings before 67 are not essential.
• Discussing options such as a partial pension, longer full-time work or a phased transition with an employer.

It is also important to distinguish between the state pension, an occupational pension and private pension provision. Depending on the product, separate rules may apply to additional earnings and offsets. Anyone with several pension pillars should examine closely how they interact.

Terms worth knowing

Full pension without reductions: This is the level of pension at which no deductions apply for taking retirement early. In many systems, this point is linked to an age of around 67.

Additional earnings limit: The amount that can be earned alongside a pension without deductions. Under the new rules, earnings above that figure will trigger either a partial or complete reduction, depending on age.

Progressive retirement: A model in which employees reduce their working hours step by step while initially receiving only a partial pension in return. The aim is a gradual transition rather than an abrupt stop.

How to prepare strategically for the new rules

Anyone wishing to keep as much net income as possible should calculate the options several years before their planned retirement date. In some cases, starting the pension a little later while remaining in regular employment may be more worthwhile than claiming it early with severely restricted additional earnings.

It may also make sense to move periods of additional work to after the 67th birthday, provided health and employment opportunities allow. At that point, every extra hour worked can genuinely be paid out, without the pension fund taking a share.

Overall, the reform shows that anyone relying on side jobs before 67 will need to adjust their plans. A close look at personal finances and some flexibility in life planning will determine whether the new rule is merely frustrating or genuinely painful financially.