How is my pension from an occupational pension scheme taxed?
Pensions from occupational pension schemes are part of the so-called basic provision and are taxed like pensions from the statutory pension insurance. The following points are important:
Taxable portion
The taxable portion of the pension depends on the year the pension begins. For pensions starting in 2024, it is 83%. This percentage increases annually by half a percentage point until it reaches the full 100% in 2058 (§ 22 No. 1. a) aa) EStG, amended by the "Growth Opportunities Act").
Pension allowance
In the second year of receiving the pension, the remaining amount after deducting the taxable portion is set as your personal pension allowance. This amount remains unchanged and tax-free for life.
Taxation from the third year
From the third year of receiving the pension, it is taxable after deducting the allowance and the standard allowance for income-related expenses of 102 Euro. Any pension increase is fully taxable.
Income-related expenses
The tax office automatically applies an allowance of 102 Euro. You can also declare higher expenses such as tax consultancy fees or pension advisory costs, but these must be proven.
Note: The pension allowance remains the same for life. Any amount above the allowance due to pension increases must be fully taxed.
Example:
Hans Müller retired in 2009 and receives a pension of 15.000 Euro in 2024. Of this, 3.000 Euro are pension increases added since 2009. His pension allowance, set in 2009, remains at 5.040 Euro. 58% of his original pension of 12.000 Euro, i.e. 6.960 Euro, is taxable.
Since the pension allowance remains unchanged, the 3.000 Euro pension increases are fully taxable. The taxable pension for 2024 is therefore:
- Taxable portion of the original pension: 6.960 Euro
- Plus pension increases: 3.000 Euro
In total, 9.960 Euro is taxable. As this is below the basic allowance of 11.784 Euro (2024), Hans Müller does not have to pay tax despite the pension increases.
If Hans Müller were to retire in 2024 and receive a pension of 15.000 Euro, 83% (12.450 Euro) would be taxable. In this case, he would have to submit a tax return.
