Statutory pensions are taxable earnings

Statutory pensions are taxed basically in the same way as other earnings. However, the following component are not taxed:

  • the child increase of the national pension
  • a pensioner’s basic-rate care allowance
  • front veterans’ supplements, veterans’ supplements, and pensioners’ housing allowance.

The taxation and contribution burden of pensions differ from those of wages due to different tax deductions and social insurance contributions. Pension income is subject to a pension income deduction in both municipal and state taxation.

No unemployment insurance or earnings-related pension contribution is deducted from the pension income. A government medical treatment charge is deducted from pension income, but not the medical care insurance contribution.

Table. Full amount of pension income deduction and the annual income level as of which the pension recipient starts to pay tax, as well as the annual income level as of which no deduction is granted (in 2020).

Full deduction

Pension, tax becomes payable

Pension, no deduction

 Municipal taxation




 State taxation




Within the lower income brackets, the pensioner’s take-home income is higher than for wage earners at the same income level. Within the higher income brackets, the taxation evens out.

In the higher income brackets, the total contribution burden of pension income is more-or less on the same level with the wage-earner’s tax and contribution rate level, in which the wage-earner’s earnings-related pension and unemployment insurance contributions have been taken into account.

Employees’ earnings-related pension contributions

Age of employee, years Tax rat, % of gross wages
17 – 52 7.15
53 – 62 8.65
63 – 67 7.15

The transition rules for the raised contribution for the 53-62-year-olds is valid from 2017-2025.


The earnings from work of a pension recipient is taxed as any other earned income. Other earned income reduces the pension income deduction: when the deduction decreases, the tax rate increases. On the other hand, the earnings deduction and the deduction for the cost of acquiring an income is made to the actual wage income.

No unemployment insurance contribution is deducted from the wages of a person who has turned 65. The pension contribution is paid until the age when the insurance obligation ends, determined separately for each age cohort. No health insurance contribution is deducted from the wage of persons who have turned 68.

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