Navigating Pensions: Widows' Pensions and Your Own Benefits Mixed
- by Nadine
- 3 Min
Calculating a Widow's Pension with Your Own: A Guide - Pension calculations: Understanding the impact on a widow's benefit relative to her personal pension plan
When life takes an unexpected turn and you're left as a widow, you might want to know how your pension situation pans out. Let's delve into the intricacies of widows' pensions alongside your own pension.
If you've got a deceased spouse and you're not earning big bucks, you'll likely qualify for a widow's pension to cover daily expenses. The same principle applies if your kids are minors or still in school – an orphan's pension is provided. However, keep in mind that these survivor benefits tend to drop if your income exceeds a certain threshold.
Now, understanding the ins and outs of survivor pensions can be complex, as the pension amounts, tax-free allowances, and tax rates depend on various factors, including the deceased's date of birth, retirement age, the date of marriage, and the calendar year. It's always best to consult an expert for tailored advice regarding your personal situation.
However, the following guidelines offer a general overview:
How Much is a Widow's Pension?
First off, a tax-free allowance comes into play, currently set at €1,038.05 in 2025 for singles. It's calculated by multiplying the current pension value per pension point (€39.32) by the factor 26.4, and increases with younger children still eligible for an orphan's pension by around €1,500 for two children.
Next up, the amount of your net income or net pension that exceeds the tax-free allowance is taken into consideration. For instance, if you get a monthly pension of €1,500, after deducting the €1,038 tax-free allowance, you're left with €462. The German Pension Insurance then deducts 15 percent of this amount, resulting in a deduction of €69.30 from your widow's pension because your net pension surpasses the tax-free allowance limit.
For those still working but not yet receiving a pension, the net employment income that goes beyond the tax-free allowance is taken into account, with a flat rate of 40 percent being deducted.
What Constitutes Net Income?
To determine your net income, all types of income are accounted for, except for 'means-tested benefits' such as disability pensions, unemployment benefits, and basic security. Also, benefits from state-funded pension schemes like Riester and Rürup pensions are not considered in this tally.
So, income such as monthly pension, monthly income, rental and leasing income, capital income (like savings interest or dividend income), and for the self-employed, the expected annual income are added up. The gross amounts are first calculated for each income source, and for employees, a flat rate of 40 percent is deducted as an approximation of tax and social security contributions. For pensions, a flat rate of 15 percent is deducted as a rough estimate of taxes and health insurance contributions. For rental income, 25 percent is deducted. The remaining amounts are added to give your net income.
To figure out the remaining part of the widow's pension that's paid out, follow the aforementioned procedure.
Taxing Pension and Widow's Pension Recipients
When it comes to taxation, whether you get only a pension or both a pension and a widow's pension doesn't make a difference. In essence, both incomes are added up, and a basic allowance is applied. This time, it's a €12,084 basic tax allowance for pensioners in 2025. This basic allowance is subtracted from your own pension income. Thus, pension taxation starts only at around €1,000 per month.
As a result, new pensioners can currently receive a gross pension of around €16,240 annually, or €1,323 monthly, without paying taxes on it, as the taxable portion of the pension was 83% in 2024, meaning €13,481 of the total €16,240 is taxable. Pensioners can initially deduct special expenses and provision expenses, as well as extraordinary burdens, via the annual tax return, which reduces their pension, leaving €12,084 taxable income.
However, the taxable portion of the pension isn't the same for all pensioners; it depends on the year of retirement and increases marginally each year. In 2005, this increasing tax rate started at 50%. By 2040, 100% of gross pension income will be taxable.
- The community policy should include clear guidelines on how to calculate pensions for widows, taking into account factors such as the deceased's date of birth, retirement age, and the calendar year.
- If a widow has dependents, the amount of her pension may be reduced if her income exceeds a certain threshold.
- A survivor pension's meaning can be complex to understand, and seeking advice from a financial expert is advised for personalized advice.
- In personal-finance matters, it's important to consider all types of income, such as pensions, employment income, rental and leasing income, capital income, and self-employment income, when determining net income for the calculation of widow's pensions.
