In 2024, a total of 22.3 million people in Germany received benefits totaling approximately 403 billion euros from statutory, private, or company pensions.
According to data released Friday by the Federal Statistical Office, the number of pension recipients increased by 0.75 percent, or 167,000 people, compared to the previous year. The total amount of pension benefits rose by 5.7 percent, or 21.7 billion euros, over the same period. Approximately 70 percent of these benefits, totaling 282.6 billion euros, were subject to income tax, representing an increase of around 15 percentage points since 2015.
This increase in the proportion of taxable pensions is largely attributed to the 2005 Act on Taxation of Income from Old-Age Provision (Alterseinkünftegesetz). A key element of this legislation was a shift from upfront taxation of contributions to taxation of benefits at the point of disbursement for statutory basic pensions. During a transitional phase, pension contributions have been progressively made tax-exempt, with taxation deferred to the payout phase.
The proportion of pension income subject to tax depends on the year in which the pension commenced; later pension start dates result in a higher proportion of taxable income. Additionally, general pension increases contribute to a higher taxable share, as these increases are fully subject to tax. The Growth Opportunities Act, effective March 27, 2024, extended the transitional phase, initially scheduled to conclude in 2040, to 2058. Consequently, new statutory pensions will not be fully subject to income tax until 2058.
A significant proportion of pensioners have taxable pension income that falls below the annual tax-free allowance after relevant deductions, meaning many pension payments remain tax-free if no other income is received. Data on the number of pensioners paying income tax for 2024 is not yet available due to the timeframe for tax assessments.
The most recent complete data, for 2021, indicates that approximately 41 percent, or 8.9 million, of the 21.9 million pension recipients paid income tax. This represents an increase of 0.74 percentage points, or 214,000 people, compared to 2020.
Around 81 percent of those paying tax on their pensions in 2021 – including surviving spouses and children – also had other sources of income, such as occupational pensions, earned income, or rental income. This also includes combined assessments for married couples where the income of both spouses is aggregated for tax purposes, according to the Federal Statistical Office.
