Company pensions (Werkspensionen) paid by the former employer or a support fund of the employer are generally regarded as wages and salaries and are subject to income tax deduction. If applicable, a pension allowance of a maximum of 3,000 euros is granted, which is reduced for each new cohort until 2040. For the 2020 cohort, the pension allowance is a maximum of 1,200 euros, and for 2021 it is a maximum of 1,140 euros. For the individual retiree, the pension allowance applicable at entry remains the same for the entire period of pension receipt.
The deduction of the employee lump-sum allowance has been discontinued as of 2005. Instead - as with pensions - the income-related expenses lump sum of €102 is deducted.
In order to avoid an excessive burden due to the discontinuation of the employee lump sum in the transition phase up to 2040, a supplement to the pension allowance was introduced, which will also be phased out by 2040. For previous pensioners and when the pension began in 2005, the supplement to the pension allowance was 900 euros. If the pension starts in 2020, the supplement to the pension allowance will be 360 euros, and 342 euros if the pension starts in 2021.