Private pension and mandatory health insurance: How to secure your income in retirement
20 May 2025
6
Minutes
Katrin Straub
CEO at nextsure
The joy of retirement can be overshadowed by unexpected health insurance contributions on private pensions. Many retirees are unsure which income is subject to contributions and which is not. This article provides clarity and shows you ways to ease your financial burden.
The topic in brief and concise terms
Pensioners with compulsory health insurance (KVdR) generally do not pay health insurance contributions on purely private pensions, while those with voluntary insurance do.
There is a tax-free amount for compulsory insurance pensioners with company pensions (2025: 187.25 euros), which does not apply to those who are voluntarily insured.
Privately insured pensioners pay income-independent contributions and may receive a subsidy from the pension insurance.
Health insurance contributions on private pensions: Understanding the basics
Many prospective retirees wonder if their private pension is subject to compulsory health insurance and thus incurs contributions. The answer is not universal but crucially depends on your status in health insurance. In principle: Pensioners who are compulsorily insured in the health insurance for pensioners (KVdR) usually do not pay health insurance contributions on purely private pensions, such as those from a privately concluded pension insurance. This also applies to other private income such as rental income or capital gains, which are received in addition to the statutory pension. It is different for pensioners who are voluntarily insured under statutory health insurance; here, almost all types of income are taken into account for contribution calculation. For those privately insured, however, the income does not affect the contribution amount of their private health insurance. Accurately assessing your situation is the first step towards financial security in retirement.
Compulsory Insurance vs. Voluntary Insurance: A Crucial Difference for Your Contributions
The status as a compulsorily insured pensioner in the KVdR is often the key to contribution exemption for purely private pensions. To achieve this status, you must meet the so-called 9/10 rule: In the second half of your working life, you must have been legally insured for at least nine-tenths of the time. This may have been through compulsory membership, voluntary membership, or family insurance. Those who meet this requirement are generally automatically compulsorily insured as pensioners and benefit from the fact that no contributions are due on private capital income or private pension insurance. Many pensioners overlook that periods of family insurance are fully credited here. Voluntarily insured pensioners, on the other hand, have to pay contributions on most of their income, including private pensions. The general contribution rate for this is fourteen point six percent plus the individual additional contribution of the health insurance fund. Therefore, it is essential to thoroughly review your insurance history to avoid surprises later on with the health insurance contributions as a pensioner.
Occupational pension provision and pension benefits: Where allowances apply
In addition to purely private pensions, income from occupational pension schemes (bAV) or other pension entitlements often plays a role. Here, the situation regarding compulsory health insurance is more complex. Since 1 January 2020, compulsory insured pensioners have had an exemption amount for benefits from bAV. In the year 2025, this exemption amount is 187.25 euros per month. This means that health insurance contributions are only payable on the part of the occupational pension that exceeds this exemption amount. For lump-sum capital payouts from a bAV, the sum is spread over ten years (1/120 per month) to determine the monthly burden. It's important to note that this exemption does not apply to voluntarily statutory insured pensioners. For them, these earnings are generally fully subject to contributions. Other pension entitlements, such as civil service pensions, are often subject to a free allowance; if this is exceeded, the entire amount is subject to contributions. A careful examination of the respective type of income is crucial here.
Understanding Contribution Calculation: How Your Deductions Are Composed
The amount of health insurance contributions for retirees who receive taxable income alongside their statutory pension depends on various factors. For retirees compulsorily insured within the KVdR, the general contribution rate of currently fourteen point six percent is levied on the statutory pension, with the pension insurance covering half, that is, seven point three percent. In addition, there is the individual additional contribution from the health insurance fund, of which the pension insurance also covers half. For taxable pensions (e.g., company pensions above the exemption limit) and income from self-employment, KVdR members pay the full general contribution rate plus the full additional contribution themselves. For voluntarily insured individuals, the calculation is more comprehensive: all income for living expenses is considered, including not only the pension and pensions but also rental income or proceeds from a private pension insurance. The contribution rate on these incomes is often the reduced rate of fourteen point zero percent plus the full additional contribution. You should clarify the exact composition of your taxable income with your health insurance provider. Retirees generally bear the long-term care insurance contributions alone; the rate is currently three point six percent (as of 2025, potentially a surcharge for childless individuals).
The following types of income can be relevant for those who are voluntarily insured:
Statutory pensions
Company pensions and other pension benefits
Income from self-employment
Capital gains (e.g., interest, dividends)
Income from renting and leasing
Private pensions (e.g., from private pension insurances, Riester pensions)
The complexity of contribution calculation highlights the need for an individual assessment.
Special Case for Private Health Insurance: No Income-Dependent Contributions
For pensioners who are privately insured, the question of contribution obligations on a private pension is different. The contributions to private health insurance (PKV) are calculated independently of income. This means that additional income in retirement, whether from a private pension scheme, capital gains, or rental income, does not lead to an increase in the PKV contribution. The agreed insurance coverage and the associated tariff characteristics determine the contribution amount. However, privately insured pensioners who receive a state pension can apply for a subsidy from the pension insurance to their PKV contributions. This subsidy is based on the amount that the pension insurance would spend for a legally insured pensioner (currently seven point three per cent of the gross pension plus half of the average additional contribution). However, the subsidy is limited to a maximum of half the actual insurance premium. A daily sickness allowance insurance usually ends with the receipt of an old-age pension. The stability of contributions in old age is a frequently mentioned advantage of private health insurance in retirement.
Expert tips for optimizing your contribution situation
To minimise the burden of health insurance contributions in old age, early and careful planning is crucial. When choosing pension products, the later impact on health insurance obligations should already be considered. Our expert tip: Check your expected insurance status at retirement age (compulsory insured in KVdR or voluntarily insured) and adjust your pension strategy accordingly. For individuals who are likely to be compulsory insured in the KVdR, purely private pensions are often more advantageous concerning health insurance contributions than certain forms of occupational pensions, especially when these significantly exceed the allowance. When facing a payout from a life or pension insurance, the choice between a lump sum payment and pension payment can also have contribution-related consequences, particularly for voluntary insured persons. Always have your contribution assessments checked thoroughly in retirement, especially when income from various sources comes together. It is not uncommon for allowances to be incorrectly considered or income wrongly classified. A review can save you real money. If unsure, professional advice, such as that offered by nextsure, can provide clarity and show individual solutions. Remember, the private disability pension can also be considered as income by the health insurance.
Important aspects of contribution optimisation include:
Early examination of the expected health insurance status in retirement.
Conscious selection of pension products taking into account contribution obligations.
Careful analysis of the pros and cons of pension versus capital payout.
Thorough review of all health insurance contribution assessments.
Utilisation of allowances and free limits wherever possible.
Where applicable, examination of tariff change options in private health insurance.
Forward-looking planning helps to reduce the financial burden in old age.
Keeping an eye on legal foundations and current developments
The legal framework for mandatory health insurance for retirees is primarily found in the Fifth Book of the Social Code (SGB V). For compulsory insurance in the KVdR, Section 5 Paragraph 1 Number 11 SGB V is central, defining the 9/10 rule for the pre-insurance period. The obligation to contribute for pension benefits, including company pensions, is regulated in Section 229 SGB V, while Section 226 Paragraph 2 SGB V sets the allowance for company pensions for retirees with compulsory insurance. It's essential to note that legal regulations can change, as demonstrated by the introduction of the allowance for company pensions in 2020. Our expert tip: Keep yourself regularly informed about potential legal changes that might affect your contribution situation. Jurisprudence can also clarify existing regulations. For example, the Federal Constitutional Court has ruled that privately financed portions of direct insurance policies must not be subject to contributions for KVdR retirees after leaving the company, as long as the retiree was entered as the policyholder. This illustrates how dynamic the legal field can be and the importance of staying updated, for instance, on whether an occupational disability pension and private disability insurance pension are subject to health insurance. The complexity often requires a precise case-by-case examination.
Your path to optimal protection: Take advantage of consultation
More useful links
The German Pension Insurance provides comprehensive information on retirement planning options in Germany.
The German Pension Insurance gives detailed information on health and long-term care insurance for pensioners in Germany.
The Federal Ministry of Finance offers the final report of the focus group on private pension schemes as a PDF.
The Association of Private Health Insurance (PKV) provides information on private health insurance for retirees in Germany.
The Consumer Advice Centre provides consumer information on private pension insurance as a retirement planning option.
Destatis (Federal Statistical Office) publishes a press release on the income and financial situation of older people in 2023.
The Federal Ministry of Labour and Social Affairs (BMAS) provides information on retirement income and additional pension schemes.
FAQ
Which types of income are subject to contributions for voluntarily insured pensioners?
For voluntarily statutory insured pensioners, generally all types of income are taken into account for contribution calculation. This includes the statutory pension, pension benefits (e.g., company pensions), income from self-employment, capital gains, income from renting and leasing, as well as private pensions (e.g., from private pension insurance or Riester contracts).
Does a private pension affect my private health insurance?
No, the contributions to private health insurance (PKV) are independent of income. Therefore, receiving a private pension does not lead to an increase in your PKV contributions.
What happens if I do not meet the requirements for the KVdR?
If you do not meet the prior insurance periods for the KVdR, you can usually take out voluntary statutory health insurance. Alternatively, there is the option of private health insurance if not already in place. In the case of voluntary statutory insurance, a wider range of income is subject to contributions.
Does the allowance for company pensions also apply to long-term care insurance?
No, the allowance for occupational pensions (currently 187.25 euros for 2025) only applies to contributions to health insurance. In long-term care insurance, there is an exemption limit (not an allowance) for pension benefits. If this is exceeded, the full amount is subject to mandatory long-term care insurance.
Can I switch from private to statutory health insurance as a retiree?
A switch from private health insurance (PKV) back to statutory health insurance (GKV) is generally only possible for retirees in very limited exceptional cases, for instance, if the criteria for family insurance are met, or under certain conditions when there is a significant drop in income below the mandatory insurance threshold before retirement. Typically, changing back after entering retirement is not an option.
Are foreign pensions also used for health insurance contributions?
Yes, for pensioners who are mandatorily insured under the KVdR, comparable pensions from abroad are also subject to health insurance contributions. For those voluntarily insured, foreign income is already taken into account as part of the total income.
