Additional earnings as a pensioner

What am I allowed to earn extra money as a pensioner?Pensioners are allowed to earn additional income and where the additional income limit is for standard, partial, full, widow's and reduced earning capacity pensions?

16.02.2022 – 6 min reading time

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To the point

The amount you may earn in addition without deductions depends on the statutory limits on additional earnings and the type of pension.

In most cases 6.300 Euro per year free of charge. Any additional earnings above this amount will be credited to your pension at a rate of 40 percent.

However, because of the Corona pandemic, a higher value applies to 2022: 46.060 euros may be earned in addition.

If you have reached the standard retirement age that applies to you, you are allowed to earn an unlimited amount on top of your state pension. From 450 euros per month, however, you may have to pay tax on your earnings.

What counts as additional income for pensioners?

What counts as additional income to the pension is regulated in § 34 of the Social Code (SGB) Part 6. There it is said: "As additional earnings are work pay, work income and comparable income to be considered."Meanwhile, according to the legislator, remuneration "received by a caregiver from the person in need of care" and remuneration received by disabled persons for an activity from a recognized workshop are not considered as additional earnings.

It is important to know here, however, that there are differences in the additional earnings to the pension, depending on which type of pension it is about. The law distinguishes between additional earnings for old-age pensions, pensions for reduced earning capacity and widows' pensions.

How much can I earn as a pensioner without being taxed??

In principle, the income of a pensioner must be taxed in the same way as the income of employees and freelancers or the self-employed. The amount of income, which has to be declared on the tax return, is calculated from the respective pension and the additional income. No – or very low – taxes on the additional income are only due if the additional income is up to 450 euros. Income up to this amount counts as a mini-job. Are taxed at a flat rate of only two percent. A social security contribution-. Further tax liability does not apply.

Additional earnings as a pensioner

Rental income and expense allowances: Does this count as additional income?

Income that is not generally counted as additional pensionable income is also defined in the Social Security Code. This category includes, among other things, (tax-free) expense allowances from an honorary position, pensions from work, supplementary pensions from the public service and social benefits such as sick pay. Income from capital assets also falls through the cracks. Income from a non-commercial rental or leasing activity.

How much additional income is allowed with old-age pension?

Since 1. From July 2017, the supplementary income to the pension is regulated much more flexibly than was previously the case. This is because the introduction of the so-called flexi pension has eliminated the fixed supplementary income limits. Since then, pensioners can, in principle, earn 6.300 euros per year in tax-free additional earnings. Of the earnings above this limit, 40 percent are deducted from the pension. This also applies to pensions for reduced earning capacity. The previous rigid partial pension levels. Earnings limits have been eliminated as a result.

Once again, the supplementary income regulations have changed in the wake of the Corona pandemic. Because the pandemic has increased the need for employees of retirement age – for example, in the medical field. In nursing care – the additional earnings limit was set by the federal government for the calendar year 2022 at 46.060 Euro per year raised.060 Euro per year raised. So I can draw pension. Working full time?Even after reaching the standard retirement age, you can continue to work in your job without any problems. Either you forgo your pension entitlement for the time being. Continue to pay into the pension insurance. In this case, you will receive a supplement to your pension of 0.5 percent for each month that you continue to work. Also by the further contribution payments your pension increases.

Or you claim your pension entitlement despite your continued employment. Then you have two options: You decide to continue paying contributions to the pension insurance scheme. This increases your pension to 1. July of the following year. Or you will no longer have to pay contributions to pension and unemployment insurance and will therefore receive more net income from your gross income. Since you can no longer draw sick pay when you reach the standard retirement age, your health insurance contribution is also reduced.

But be careful: You will still have to pay tax on your additional income if your salary exceeds 450 euros per month.

How much may you earn in addition to your pension?

Just as for salaried employees and the self-employed at retirement age, there are also a whole range of supplementary income regulations for civil servants who receive a pension. However, these are sometimes even more extensive in the civil servant pension scheme. More complex than statutory pension insurance.

As a rule, the maximum limit for additional earnings is the same as the so-called pensionable remuneration from the final step of the respective grade. Retired civil servants can therefore leave the difference between their pension. Earn additional income free of charge from your previous active salary. However, if they are credited, they must retain at least 20 percent of their respective pension payments.

What can I earn as a pensioner at the age of 63??

In the case of an early retirement pension, for example the pension at 63, your pension will be paid to you as a full pension, which means that you will receive your pension in full if your additional earnings remain below the currently applicable limit, which is usually 6.300 € amounts to. Exceptions currently apply due to the Corona pandemic. This limit applies in the old. New federal states equally. You must declare the part-time job and your earnings to your pension insurance provider. If you reach the standard retirement age, you can again earn an unlimited amount of additional income.

If the limit for additional earnings to the pension is 6.300 € gross or net?

The statutory regulations on additional earnings always refer to gross amounts.

What happens if the additional earnings are higher??

This is quite simple: If your additional earnings are higher than the legally regulated additional earnings limit, you must expect corresponding deductions (around 40 percent of the excess amount) from your pension. Depending on how much additional income you have earned, you will receive less pension or, in extreme cases, none at all.

For example: you receive an early retirement pension of 900 euros per month. In addition, you earn 1 euro per month in your job.400 euros. This results in annual earnings of 16.800 euros. While this would have no consequences under the exemptions currently in place due to the Corona pandemic, it would likely lead to a reduction in your pension again in 2023. Because after deducting the then again applicable tax-free amount of 6.300 euros, still remains 10.500 euros left over. Calculated on a monthly basis, this would be 875 euros. 40 percent of this, i.e. € 350, would be credited to your pension. You would therefore only receive a monthly (partial) pension of 550 euros.

Can earn an unlimited amount in addition to your pension?

In principle, no, because the legislator has introduced a personal upper limit for additional earnings with the Flexirenten Act. For the so-called supplementary earnings cap, your highest income from the last 15 calendar years before the start of the old-age pension is used. The earning points for this year are multiplied by the applicable reference value. If the reduced pension and the additional income together exceed this amount, 100 percent of the excess income will be offset against the partial pension. If, in the above example, you had an individual supplementary earnings cap of 1.800 euros, your additional earnings together with your partial pension (1.400 Euro + 550 Euro = 1.950 euros) exceed this amount by 150 euros. So your shortened pension would be reduced by 150 euros to 400 euros.

Special case Corona: Higher additional earnings also possible in 2022

Thanks to the so-called social protection package of the federal government, the additional earnings limit since 2020 is no longer 6.300 per calendar year, but in 2021 and 2022 at 46.060 euros. This means that if you earn up to this amount, your retirement pension will no longer be reduced. The reason for this measure: In the wake of the Corona pandemic, the German government expected major staff shortages in areas such as nursing care. By adjusting the supplementary earnings rules, people in retirement should be additionally motivated to take up work in these and other areas without having to fear major cuts in their pensions. However, according to information from the German Pension Insurance, from 2023 onwards the original supplementary income limit of 6.300 euros per calendar year apply.

Is the additional income of pensioners checked?

Always to the 1. In July of each year, the German pension insurance company makes a forecast of your expected income and compares it with the currently applicable tax-free amount. Accordingly, your pension for the period from 1. July. As of 1. January of the following year. July and from 1. January of the following year. To the following 1. July, a so-called peak settlement is then made, d.h. the prognosis is compared with the actual earnings to the nearest cent. If you have received too much pension, you will have to pay back the determined amount. Conversely, you will receive an additional payment if you have been paid too little pension. At the same time, a new forecast is made for the coming twelve months.

If the pension insurance company has transferred too much pension to you for a certain period of time, then it reserves the right to withhold a portion of your current pension. However, this only applies if the overpayment was no more than 200 euros and you agreed to this procedure in your pension application.

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