Settling the Widow's Pension When Both Partners Had Individual Pensions: A Breakdown
- Blog Post by Nadine Oberhuber
- Approx. Reading Time: 3 Minutes
Spouse's Posthumous Benefit: Determining Amount Based on Deceased's Pension - Pension for widows: Explanation of calculation relative to personal pension
When a spouse bids adieu, survivor pensions like the widow's pension are intended to help cover living costs for the remaining spouse. Similarly, orphan pensions are provided when a parent passes away, and the children are still minors or in training. However, these benefits primarily support individuals with low incomes, and they decrease once the survivors' income exceeds a specific level.
The specifics regarding survivor pensions are generally complex, and both the pension amounts, tax-free allowances, and tax rates vary based on the calendar year, the deceased's date of birth, retirement age, the survivors' age, and the marriage date. To get more tailored advice, consulting experts is highly recommended. Nevertheless, let's delve into the principles that apply:
How is the Widow's Pension Amount Calculated?
The calculation commences with a tax-free allowance, which currently amounts to €1,038.05 for singles in 2025. This allowance is calculated by multiplying the current pension value per pension point (currently €39.32) by the factor 26.4. If the survivor has young children who are still eligible for orphan pensions, their tax-free allowance is augmented by child supplements, which stands around €1,500 for two children.
Next, the survivor's own net income or net pension is determined. If it surpasses the tax-free allowance, a corresponding percentage is deducted. For instance, if the monthly pension is €1,500, after subtracting the €1,038 tax-free allowance, €462 remains. The German Pension Insurance Association then deducts 15% of this amount, resulting in €69.30, which is subtracted from the widow's pension since the survivor's net pension surpasses the tax-free allowance limit.
For survivors who are still employed and don't receive a pension themselves, their net income from work is taken into account. From this, 40% is deducted. So, if someone earns €2,500, after subtracting €1,038, they have €1,462 left, which is then deducted from the widow's pension.
Income Factors Considered in the Net Income Calculation
To ascertain the net income, every type of income is considered, except for the so-called "means-tested benefits" such as disability pensions, unemployment benefits, and basic security. Benefits from state-funded pension schemes, like Riester and Rürup pensions, are also excluded.
Consequently, income like monthly pensions or earnings, rental and leasing income, capital income (like savings interest or stock dividends), and, for self-employed individuals, expected annual income, are tallied up. First, the gross amounts are calculated. For employees, 40% is then deducted as a flat rate, intended to correspond to the tax and social security burden of dependent employees. For pensions, 15% is deducted, corresponding to standard taxes and health insurance contributions. For rental income, 25% is deducted. The remaining values are added together to find the net income.
With these principles in mind, the unpaid portion of the widow's pension that is allocated is calculated accordingly.
Taxation of Pension Recipients Receiving Both a Pension and Widow's Pension
For tax purposes, there is no difference between someone receiving only a pension and someone receiving a pension and widow's pension. In principle, both incomes are added together and a basic allowance applies. Currently, this basic allowance for pensioners in 2025 is €12,084. This allowance is subtracted from the pension income. Therefore, taxation of the pension only starts from an approximate €1,000 per month.
According to the Federal Ministry of Finance, new pensioners can currently receive a gross pension of around €16,240 per year, or €1,323 per month, without paying taxes on it, because: the taxable share of the pension was already 83% in 2024, meaning €13,481 of the €16,240 per year is subject to taxation. Pensioners can initially deduct special expenses and provisions for old age, as well as extraordinary burdens, which is done through the annual tax return. This decreases their pension, leaving €12,084 of taxable income.
However, the taxable portion of the pension is not the same for all pensioners, but depends on the year of retirement and gradually increases each year. In 2005, this increasing tax rate started at 50%. By 2040, 100% of gross pension income will be taxable.
- Pensions
- Spouses
- Retirement
- In the context of survivor pensions like the widow's pension, community policy should consider granting exceptions or exemptions for vocational training expenses, as survivors may require skills training to support themselves or transition into a new career.
- To harmonize the meaning of survivor pensions and their effects on retirement income, it would be beneficial to incorporate clear and unified guidelines in the policy, outlining the income levels at which these benefits start to diminish, ensuring fairness and predictability for beneficiaries.
- When planning for the future, individuals should be aware that the deductions applied to the widow's pension not only consider monthly pensions or earnings, but also the net income from work for those who are still employed post-retirement, since these deductions significantly impact the final pension amount.
