Income Offsetting: How Much of Your Income Is Deducted
The most common worry after filing the application is: am I still allowed to earn anything at all? The answer is more reassuring than most people expect. There is no earnings ceiling above which the widow's pension simply disappears. There is an allowance — and only what lies above it is offset, at 40 percent rather than 100.
Step one: from gross to countable net
The pension insurance does not work with your actual net income but with a statutory flat rate. Employment income is reduced by a flat 40 percent, self-employed income by 39.8 percent, civil-service pay by 27.5 percent. For your own state pension it is only 14 percent, for occupational and supplementary pensions 29.6 percent, and for investment income such as interest or rent 25 percent. These flat rates apply regardless of your tax class and your actual deductions: someone earning €2,500 gross has €1,500 of countable net income, even if the bank statement shows a different figure. The Widow's Pension Calculator handles this conversion for you as soon as you select the matching type of income.
Step two: the allowance
The allowance is then subtracted from the countable net figure. It equals 26.4 times the current pension value. Since 1 July 2026 that value has been €42.52, putting the allowance at €1,122.53 per month; from July 2025 to June 2026 it was €1,076.86. For each child entitled to an orphan's pension the allowance rises by 5.6 times the pension value, that is €238.11. With two children it therefore reaches €1,598.75 a month.
Step three: 40 percent of the excess
Only the amount above the allowance counts — and 40 percent of it is offset against the widow's pension. The other 60 percent stays with you. Put differently: for every euro of countable net income above the line you lose 40 cents of pension and keep 60 cents of income. Earning more therefore remains clearly worthwhile even above the allowance.
Three worked examples
Example one, an employee on €1,800 gross: after the 40 percent flat deduction, €1,080 of countable net remains. That is below the €1,122.53 allowance — nothing is offset and the widow's pension stays intact.
Example two, an employee on €3,000 gross: countable net of €1,800, of which €677.47 exceeds the allowance. Forty percent of that is €270.99, deducted from the widow's pension. On a large widow's pension of €880 gross, €609.01 remains.
Example three, an own retirement pension of €1,400: here the flat deduction is only 14 percent, so countable net is €1,204. The excess over the allowance is €81.47, of which €32.59 is offset. The low flat deduction on pensions means a pension of your own is offset sooner than a salary of the same size.
What is not counted at all
Not every euro counts. Parental allowance, child benefit, care allowance for home care, basic income support, housing benefit and payments from private accident or life insurance are all left out. Subsidised private retirement provision is likewise disregarded. Assets as such play no role either — only the ongoing income they generate, such as interest or rent. And during the grace quarter no income is offset at all, however much you earn.
How the income is determined — and a common miscalculation
For the ongoing payment the pension insurance initially takes your income in the last calendar year before the death as the benchmark. It is reviewed and adjusted once a year. If your income changes permanently by more than ten percent, report it yourself — that avoids repayment demands that would otherwise build up over months and then fall due all at once.
Many survivors cut their working hours in order to "stay under the limit". That almost never pays. Earning €500 more gross costs you at most €120 of widow's pension — 40 percent of the €300 increase in countable net income. On balance you are still around €180 a month better off. Offsetting is a reduction, not a cliff edge.
How your pension develops as your earnings rise is shown by the curve in the Widow's Pension Calculator. It makes visible where offsetting begins and how gently the line falls afterwards. All values are estimates; the binding calculation is made by your pension insurance institution.