Determining the widow's pension when there's an existing personal pension. - The method of determining a widow's pension in relation to the deceased individual's own pension.
When a loved one passes away, it often means the loss of a significant income source. In such situations, survivor benefits like widow's pensions can provide some financial relief. This is especially true for individuals who were not financially independent before the death of their partner. However, these benefits are not infinite and may decrease when the survivor's income exceeds a certain threshold.
The conditions for survivor pensions can be complex, and they depend on various factors such as the survivor's age, date of birth, retirement age, and date of marriage. Tax-free allowances and tax rates also change based on the calendar year. Therefore, it's essential to seek expert advice for specific cases to ensure one gets the best possible outcome.
The Basics of Widow's Pension Calculation
The process of calculating the amount of a widow's pension involves several steps. Initially, a tax-free allowance is applied, which is dependent on the survivor's income and the number of their dependent children. This allowance can range from around €1,038 for singles to approximately €2,500 for two children.
After determining the tax-free allowance, the next stage involves calculating the extent to which the survivor's net income (total income after deductions and taxes) exceeds this allowance. For instance, if a survivor's monthly pension is €1,500, after deducting the tax-free allowance of €1,038, the remaining income of €462 is subject to a 15% deduction. This means that €69.30 is subtracted from the widow's pension, since the survivor's net income surpasses the tax-free allowance limit.
For individuals still working without a pension, their net income from employment is used as the baseline, and 40% of this income is deducted. Consequently, if someone earns €2,500, after deducting €1,038, they have €1,462 above the tax-free allowance. In this case, €584 is deducted, which is then subtracted from the widow's pension amount.
What Counts as Net Income?
The calculation of net income involves taking into account several income sources, including:
- Monthly pension or pension income.
- Monthly income.
- Rental and leasing income.
- Capital income such as savings account interest or stock dividends.
- For self-employed individuals, the expected annual income.
To determine the net income, first, gross amounts are calculated. For employees, 40% is then deducted to account for taxes and social security contributions. For pensions, 15% is deducted, corresponding to typical taxes and health insurance contributions. A flat 25% is deducted from rental income.
Follow these guidelines to calculate your remaining widow's pension amounts.
The Taxation of Pension and Widow's Pension Income
Regardless of whether an individual receives only a pension or both a pension and a widow's pension, the tax treatment remains the same. The total income is combined for taxation purposes, and a basic allowance applies. For pensioners in 2025, this basic allowance was €12,084. The taxation of pensions begins only from this amount, approximately €1,000 per month.
However, the taxable portion of the pension varies for each pensioner, depending on the year of retirement and gradually increasing with each passing year. In 2005, pensioners were taxed at 50%, and by 2040, 100% of gross pension income will be taxable.
After reaching retirement age, the survivor's pension calculations may change, considering their own pension income.
In some cases, retirement may lead to a decrease in widow's pension benefits due to increased income sources.