Monthly pension payouts are taxed. This in turn depends on the age of the pensioner. The income share decreases with age: while it is still 22% for 60-year-olds, it is only 15% for 70-year-olds.
The later you retire, the lower the taxes. The table under § 22 of the Income Tax Act (EstG) provides information on the amount of the income component of the private pension. The current percentages were redefined on January 1, 2005.
Completed age at the time of retirement | Income share as a percentage of the pension in accordance with § 22 EStG |
50 years | 30 percent |
55 years | 26 percent |
60 years | 22 percent |
61 years | 22 percent |
62 years | 21 percent |
63 years | 20 percent |
64 years | 19 percent |
65 years | 18 percent |
For example:
If you retire at 63, the taxable portion of your private pension is 20 percent
If someone receives EUR 500 per month from a private pension insurance policy, 20 percent of this must be taxed at the individual tax rate - i.e. EUR 100. If the tax rate is 25 percent, a tax of 25 euros is payable.