The draft of the Growth Opportunities Act (Wachstumschancengesetz) provides relief for recipients of pension payments and retirees. For pension payments (e.g. from company pensions), a pension allowance calculated as a percentage and capped at a maximum amount, together with a supplement to the pension allowance (allowances for pension payments), remain tax-free. At present, these benefits are gradually being reduced over time, meaning that taxation is becoming increasingly unfavourable for new recipients of pension payments. Starting in 2023, the percentage applied to determine the pension allowance is to be reduced in annual steps of only 0.4 percentage points instead of the previous 0.8 percentage points. The maximum amount and the supplement to the pension allowance are also to decrease more slowly from 2023 onwards.
For annuity recipients as well, the taxable portion has been rising steadily over time. This is now being slowed down. Under the previous rules, retirement annuities would have been taxed at 100 % as early as 2040; under the new provisions, this point will not be reached until 2058. In addition, the phase-out of the old-age relief amount (Altersentlastungsbetrag) is to be slowed. From 2023, the percentage rate is to be reduced in annual steps of 0.4 percentage points rather than 0.8 percentage points. The maximum amount is to decrease by €19 per year starting in 2023, instead of the previous €38.