Why less of your company pension remains than expected
A company pension is a welcome extra in retirement. But many people are surprised by how much is deducted: the full health insurance contribution applies to company pensions, care insurance comes on top, and for tax purposes it is fully taxable in most cases. This article shows which deductions apply in 2026 and how to estimate them.
Health insurance: full contribution, but with an allowance
Compulsorily insured pensioners in the KVdR pay the full general contribution rate of 14.6% plus their fund's full additional contribution on a company pension — 17.5% at the 2.9% average. Unlike with the statutory pension, nobody shares this contribution.
There is an allowance, however: in 2026, €197.75 per month remains contribution-free. The figure equals one twentieth of the monthly reference value of €3,955 and rises with it every year. Only the part of the company pension above it is subject to contributions. If you have several company pensions, the allowance applies once to all of them together.
Care insurance: a threshold instead of an allowance
In care insurance the same amount is only a threshold. If your company pension is €197.75 or less, you pay no care contribution on it. If it is even one euro above, the entire company pension is subject to contributions — at 3.6%, or 4.2% if childless.
An example with a €400 company pension and the average additional contribution:
- Health insurance: (€400 − €197.75) × 17.5% = €35.39
- Care insurance: €400 × 3.6% = €14.40
- Total: €49.79 per month
Voluntary members of statutory health insurance have no allowance. They pay health and care insurance on the full company pension.
Lump-sum payout: contributions over ten years
If the company pension is paid out as a lump sum, you do not escape contributions. The health fund spreads the sum over 120 months and charges contributions on one hundred-and-twentieth for ten years. €60,000 thus counts as €500 per month. After the allowance, around €52.89 of health and €18 of care insurance are due on it — about €8,500 in total over ten years.
Benefits from contracts you continued with your own contributions as the policyholder after leaving the employer are not subject to contributions, insofar as they are based on these private contributions. Benefits from occupational pensions subsidised with Riester allowances have also been contribution-free since 2018.
Tax: usually fully taxable
If contributions were paid in tax-free during the savings phase — the norm for direct insurance, pension funds and similar schemes since 2005 — the later company pension is fully taxable. Unlike the statutory pension, there is no taxable share and no pension allowance. You receive the €102 flat-rate expense allowance only once, jointly for the statutory and company pension.
Exceptions: for older direct insurance policies whose contributions were taxed at a flat rate before 2005, a regular pension is taxed only on the income portion — 17% if the pension starts at 67. Company pensions from a direct commitment or a support fund, on the other hand, count as wages. The employer deducts wage tax, and a special pension allowance (Versorgungsfreibetrag) applies.
What is left in the end
If a €400 company pension is added to a €1,800 statutory pension (started 2026), income tax rises from around €500 to around €1,457 a year. Together with the contributions, only about €270 net remains of the €400 company pension. The net pension calculator works out your personal figures. How the statutory pension is taxed is explained in the main article on pension taxation 2026.
Note: as of 24 September 2026, not legal or tax advice.