Calculating a Widow's Pension: The Process with Personal Pension Benefits - Pension entitlement for widows: Understanding the impact on personal pension benefits
In Germany, a widow's pension is designed to secure living expenses for dependents when a spouse passes away. This article aims to provide a clear and concise explanation of the taxation of widow's pensions and orphan's pensions.
When a parent dies and the children are minors or in education, an orphan's pension is paid. The taxation of these pensions is handled in a specific manner. For survivors with two minor children entitled to an orphan's pension, a tax-free allowance of approximately 2,538.05 euros is provided. If the survivor's monthly pension exceeds this allowance, 15% of the excess amount is deducted from the widow's pension.
Widow's pensions are also subject to taxation. The taxable proportion of the pension varies based on the year of retirement and increases slightly each year. In 2025, 83.5% of the pension amount taxable is subject to taxation, with 16.5% remaining tax-free. This applies to both regular pensions and survivors' (widow's/widower's) pensions, although from December 1, 2025, the previously exempt pension supplement up to 7.5% will be counted as income for surviving dependents, potentially reducing their net benefit.
For survivors who are still working and not yet receiving a pension, 40% of the excess net income above the tax-free allowance is deducted from the widow's pension. The tax-free allowance for a survivor in 2025 is 1,038.05 euros, and for a pensioner, it is not explicitly provided in this context.
The taxation of both pension and widow's pension is done by adding them together and applying a basic allowance. The basic allowance for pensioners in 2025 is €12,084. If the total income exceeds a certain level, both pensions are reduced.
It is important to note that pensioners can initially deduct special expenses and provisions for old age, as well as extraordinary burdens. However, these details are beyond the scope of this article.
By 2040, 100% of gross pension income will be taxable. This gradual increase in taxability began in 2005, with the increasing taxable rate starting at 50%. The exact amount at which taxation begins is around €1,000 per month.
In conclusion, the taxation of widow's pensions and orphan's pensions in Germany is a complex matter, with the taxable proportion of the pension varying based on the year of retirement and the survivor's income level. Understanding these rules is crucial for those who are or may become recipients of these pensions.
