German Working Pensioners Face Loss of Sick Pay in 2027 Reform Wave

From January 2027, German working retirees with partial pensions exceeding two-thirds of full benefit lose sickness benefit. The reform also tightens early retirement rules and disability assessments.

Working retirees in Germany who rely on a partial pension will lose their entitlement to sickness benefit from 1 January 2027, one of several changes buried in a larger reform package approved by the coalition committee in early July 2026. The cut applies to anyone drawing a part-time pension exceeding two-thirds of the full retirement benefit – effectively ending the so-called "99.99-per-cent part-pension" that previously let older workers maintain full health-insurance coverage while still employed.

The reform arrives as more early retirees than ever choose to keep working. Data from the German Economic Institute show that roughly 25 per cent of those who retired early with 45 contribution years are still in employment, up from 18 per cent in 2022. That trend accelerated after the government removed earnings limits for early old-age pensions at the start of 2023.

The pending change is one of 33 recommendations published by an independent pension commission at the end of June 2026. Lawmakers are expected to turn the package into legislation by the end of this year. Other proposals under discussion include tightening access to early retirement for people with severe disabilities (should the standard retirement age rise further) and possibly restricting or scrapping the "pension at 63" for long-term contributors.

Current incentives already generous

For 2026 the monthly threshold for a minijob stands at €603 – equivalent to €7,236 a year – and will climb to €633 in 2027. Earnings between €603.01 and €2,000 a month fall into the midijob bracket, which carries reduced social contributions.

Since January 2026 the "Aktivrente" (active pension) has allowed retirees who have reached the standard retirement age to earn up to €2,000 a month tax-free. The measure is designed to counter skills shortages. For regular old-age pensions, supplementary earnings are now unlimited with no penalty to the pension payment.

Disability pension rules tighten gradually

People with a degree of disability (GdB) of at least 50 follow separate rules. Those born in 1964 can retire without deductions at 65; the earliest possible entry at 62 carries a penalty of up to 10.8 per cent.

Pensions were increased by 4.24 per cent on 1 July 2026, bringing the current pension point value to €42.52.

Tax relief for disabled people also improved. Since January 2026, flat-rate disability allowances are transmitted electronically to tax offices. The amounts depend on the GdB: €1,140 for GdB 50, rising to €2,840 for GdB 100. People with the "H" (helplessness) marker or blindness receive €7,400.

Disability status no longer permanent

A subtle but significant shift took effect in October 2025: disability assessment now focuses on participation in social life rather than purely medical diagnoses.

Legal experts caution that even an indefinite disability ID card offers no absolute protection. If a person's health improves substantially – defined as a drop of at least ten GdB points – the authorities can downgrade the rating. Anyone who voluntarily applies for a reassessment triggers a full review, which could result in losing disabled status altogether. The existing status remains valid for up to three months after a final, non-appealable decision.