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Pension savings more attractive for self-employed again

Pension savings more attractive for self-employed again

January 2024 - Increased interest rates are making retirement savings attractive again for the self-employed. We take a closer look at the various forms of saving through the second and third pillars.

Third-pillar retirement savings involve savings where a deposit of 990 euros (1,270 euros) entitles you to a tax reduction of 30 (25) per cent. In long-term savings, a deposit of 2,350 euros entitles you to a tax reduction of 30 per cent.

Free supplementary pension for the self-employed (VAPZ)

Within the PSPS, self-employed people are allowed to deposit 8.17 per cent of their net taxable income, with a maximum of EUR 3,859.40 for 2023. Under the social PSPS, savers enjoy additional social protection, for example in case of incapacity for work. For a social PSPS, 9.40 per cent of net taxable income may be deposited, with a maximum of EUR 4,440.43 for 2023.

Benefits

  • Deposits can be fully deducted as professional expenses (subject to timely payment).

  • Savers have to pay fewer social security contributions as net income is lower.

Disadvantage

    • Return is limited because deposits must be accompanied by a capital guarantee (branch 21 insurance).

Guaranteed interest rates were at 0 to 0.5 per cent for a long time. Including profit sharing, returns then approached 1 to 1.5 per cent per year. Today, due to increased interest rates, guaranteed returns are in the region of 1.5 to 2 per cent. At the same time, more insurers are investing the profit shares from branch 21 policies in branch 23 funds with higher potential returns.

Individual pension commitment (IPT)

Advantages

    • Free choice between branch 21 and branch 23 investments

    • Back service: the years when no deposit was made can be 'caught up' by savers

    • Premiums are 100 per cent deductible

Free supplementary pension for the self-employed as a natural person (VAPZNP) or pension agreement for the self-employed (POZ)

A second option for tax-advantaged savings for the self-employed without a company. This is the free supplementary pension for the self-employed as natural persons (VAPZNP), also known as the pension agreement for the self-employed (POZ). 

Disadvantage

  • A premium tax of 4.4 per cent applies on each deposit into the VAPZNP.

  • A tax reduction of 30 per cent in personal income tax applies on each deposit.

Advantage

  • As with the IPT, with a VAPZNP a self-employed person can opt for a branch 21, a branch 23 or a combination of the two.


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