How much tax and social contributions do I pay on a company pension?

Deductions in 2026 for compulsorily insured retirees with children and an average 2.9 percent supplement. Income tax depends on your other income.

Your health insurer treats a company pension, called Betriebsrente, as a Versorgungsbezug. Unlike with the state pension, no pension fund pays half for you. You carry the full contribution alone.

Retirees who are compulsorily insured in the Krankenversicherung der Rentner get an allowance: in 2026 the first 197.75 euros a month stay free of health contributions. For care insurance the same amount is only a threshold. If your company pension is higher, you pay care contribution on all of it, from the first euro.

Voluntarily insured retirees get no allowance. For them the whole company pension counts, as does rent or interest income. If you have private health insurance, nothing is deducted from the company pension.

If you paid the contributions tax free out of gross salary, as is usual with a Direktversicherung, Pensionskasse or Pensionsfonds, the pension is fully taxable later. It is added to your other income and taxed at your personal rate.

Parts you paid from taxed money, for example after continuing a contract privately when you changed jobs, are taxed more lightly. Usually only the so called Ertragsanteil, a fixed share, is taxable.

With a direct promise from the employer (Direktzusage) or a support fund (Unterstützungskasse), the pension counts as wages. Your former employer then deducts wage tax directly.

If you take the capital in one go, your health insurer spreads it over 120 months. One hundred twentieth counts as a monthly company pension for ten years, and the allowance and care threshold apply to it in the same way.

Income tax, by contrast, is due on the whole amount in the year of payment. The Federal Fiscal Court refuses a reduced rate if you were free to choose the capital option. A constitutional complaint against this is pending.

If you expect a larger sum, choose the payout year with care, ideally a year with little other income.

If you became the policyholder after a job change and paid in privately, the part from those contributions is free of health and care contributions. Keep the paperwork.

Company pensions with Riester subsidy via the employer are free of health contributions.

Several small company pensions are added up, and the allowance applies only once. Together with the state pension, the health insurance contribution ceiling applies, 5,812.50 euros a month in 2026.