A gross pension of EUR 1,600 may initially look like a decent pension to many people, one that should allow them to live well in retirement. Taking the contribution rates for 2026 into account, however, only around EUR 1,400 reaches the pensioner’s account – before possible income tax and, of course, before all everyday expenses such as rent, electricity, medication or care costs. Almost EUR 200 disappears every month for health and long-term care insurance.
The statutory pension rose by 4.24% on July 1, 2026 – this also sounds respectable, but it is once again calculated on the gross amount, while health and long-term care contributions rise as well. You cannot rely on the gross pension alone.
EUR 1,600 becomes EUR 1,402
The general statutory health-insurance contribution rate is 14.6% in 2026. For pensioners with compulsory insurance, the pension insurance system pays half. The pensioner therefore retains 7.3% of the general contribution. Half of the supplementary contribution set by the individual insurer is added. The following calculation uses the average supplementary contribution of 2.9% determined by the Federal Ministry of Health. The individual share of health insurance is therefore 8.75%.
Long-term care insurance is treated differently: pensioners generally bear the contribution fully themselves from their statutory pension. Anyone who has raised a child pays a contribution rate of 3.6%. Pensioners without children pay 4.2% under the statutory conditions. For the example calculation with one child, this produces a total share of 12.35% for health and long-term care insurance.
| Gross pension per month | Health and long-term care insurance | Amount paid before tax |
|---|---|---|
| EUR 1,000 | EUR 123.50 | EUR 876.50 |
| EUR 1,600 | EUR 197.60 | EUR 1,402.40 |
| EUR 1,692 | EUR 208.96 | EUR 1,483.04 |
| EUR 1,913.40 | EUR 236.30 | EUR 1,677.10 |
| EUR 3,730 | EUR 460.66 | EUR 3,269.34 |
The calculation assumes statutory health insurance, one child and the average supplementary contribution, although the latter in particular differs from one insurer to another. For pensioners without children, an additional EUR 9.60 in long-term care contributions is added at a gross pension of EUR 1,600 compared with the example calculation.
The pension increase also does not arrive in full. If EUR 1,600 was the gross pension before the adjustment, it rises to EUR 1,667.84 from July. With unchanged contribution rates, the amount paid in this calculation rises from EUR 1,402.40 to around EUR 1,461.86. Of the EUR 67.84 increase in gross pension, around EUR 59.46 remains – before taxes.
Average pension versus amount paid
Anyone asking about the average pension gets a different answer depending on the statistics: at the end of 2024, the average gross amount of old-age pensions was EUR 1,296. The average pension amount paid, by contrast, was EUR 1,154. The amount paid has already been reduced by health and long-term care contributions, but not by possible income tax.
For old-age pensions after at least 35 years of insurance, the 2025 Pension Atlas reports a national average of EUR 1,692 gross and EUR 1,501 paid out. Men in this group averaged EUR 1,892 gross, while women averaged EUR 1,459. The difference between EUR 1,154 and EUR 1,501 is not a contradiction. The first figure includes all old-age pensions, including many pensions with shorter insurance periods. The second figure considers only cases with at least 35 years of insurance. Even these 35 years do not automatically mean 35 years with average or high income.
The EUR 1,000 in the table is therefore neither a statutory threshold nor an official definition of a small pension. It merely serves as a simple reality check. Under the 2026 assumptions, EUR 876.50 remains before tax at this gross amount. The same ongoing costs have to be paid from it as from a higher pension. Health and long-term care contributions do fall with the gross amount, but they never fall to zero.
The standard pension is only a calculation case
The so-called standard pension is often confused with the average pension. It describes neither a typical pensioner nor a statistical average. It refers to an insured person who earns exactly the average income every year for 45 years and receives one pension point for each year. On July 1, 2026, the current pension value rose from EUR 40.79 to EUR 42.52. Forty-five pension points therefore produce a gross pension of EUR 1,913.40 per month. After the example calculation, EUR 1,677.10 remains before income tax.
The difference from the statistical average pension has a simple reason: many employment histories include part-time work, unemployment, raising children, longer education, self-employment without compulsory contributions or years with lower income. The standard pension leaves these differences out so that the development of the pension system can be compared over the years.
Moreover, the standard pension is not identical to the pension level. The pension level before taxes compares the available standard pension with the available average income. It does not mean that every pensioner receives 48% of their last salary.
There is no statutory maximum pension
German pension law does not prescribe a fixed maximum pension. Annual pension points are limited by the contribution assessment ceiling. The amount of the pension therefore depends on the number of years insured and the income in those years. More than 45 years of insurance are possible, as are supplements or deductions.
Another calculation serves as an illustrative upper limit for a particular employment history: an income at the contribution assessment ceiling in each of 45 years. At the beginning of 2026, the German Pension Insurance system reports a gross pension of around EUR 3,578.17 per month for this case. After the 4.24% pension adjustment, this results in around EUR 3,729.88, or EUR 3,730 when rounded.
This is not a statutory maximum pension. It is a 45-year calculation based on very high incomes subject to contributions. Under the same assumptions, around EUR 460.64 would be deducted for health and long-term care insurance. Around EUR 3,269 would remain before tax.
Income tax is added as well
Health and long-term care contributions are not even the final deduction for pensioners. Anyone receiving a statutory pension for the first time in 2026 must, under Section 22 of the Income Tax Act, treat 84% of the pension as the taxable share. This does not mean that 84% of the pension is taxed at 84%. The 84% is included in the calculation of taxable income, after which the basic allowance and other deductions apply.
The basic allowance is EUR 12,348 in 2026. Actual tax also depends on marital status, other income, the year in which the pension starts, deductible insurance contributions and other personal characteristics. Anyone who has been receiving a pension for longer retains the tax-free share established for their own pension start date.
In its overview, the Federal Ministry of Finance calculates a tax-free gross annual pension of EUR 17,084 for a single new pensioner without other income if the pension starts in 2026. This corresponds to monthly gross income of EUR 1,394 in the first half of the year and EUR 1,453 in the second half. The table does not include the insurer-specific supplementary contribution or the surcharge for pensioners without children or deductions for children. It is therefore only a rough guide …
For planning, the amount paid before tax is what counts
The pension statement states a gross pension. This is necessary for calculating entitlements, but it is not enough for a household budget. Health insurance, long-term care insurance and, where applicable, income tax lie between the gross amount and the money actually available. Personal expenses follow, and no pension statistic takes them into account.
The gross pension nevertheless remains the basis of the system. Health and long-term care insurance are not arbitrary reductions, but finance insurance coverage in old age. For a personal calculation, this changes nothing: EUR 197.60 less per month is a major item at a gross pension of EUR 1,600. Over a year, the amount adds up to EUR 2,371.20, even before possible tax or the cost of daily life is considered. Deductions in old age remain high, and planning is opaque. Here too, the state seems to be working against its citizens …
