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Private pensions, pension savings
What is private pension?
Pension savings is a long-term savings formula that allows you to build up a pension to supplement your statutory pension, and, under certain conditions, to benefit from a tax benefit.
You can take out pension savings with most banks and insurance companies active on the Belgian market.
There are 2 different ways to buy pension savings:
- If you opt for a pension savings account (for example a pension savings fund with a bank), you do not benefit from any guaranteed minimum annual return. A pension savings fund is based on securities and bonds, and the profit therefore depends on their development on the stock market. The balance sheet is established at the end of each year;
- If you opt for pension savings insurance with an insurance company, you know in advance the guaranteed minimum annual return. In addition, you may possibly receive a profit sharing which will depend on the financial results of your insurer.
The choice of one or the other product will be based on different factors such as your age or your risk profile. Your bank or insurance company will give you more information.
How much can I pay? How much is the tax reduction?
The amount of payments eligible for the tax reduction is limited per year.
In 2018 (tax year 2019), you have the choice between:
the “classic” scheme: maximum 960 euros with a tax reduction corresponding to 30% (+ municipal tax) of the amount paid (ie maximum 288 euros);
the new regime: maximum 1,230 euros with a tax reduction corresponding to 25% (+ municipal tax) of the amount paid (i.e. maximum 307.5 euros).
It is not possible to make payments for a higher amount. There is however no minimum amount.
Please note: if you exceed the ceiling of 960 euros, the tax reduction automatically goes from 30% to 25%. This excess is only beneficial to you if you pay an amount greater than 1,152 euros.
If you and your partner are taxed together, you can each reach this maximum amount separately, provided that you each have a pension savings account (group or individual) or pension savings insurance.
How will your capital be taxed?
Have you never benefited from the tax reduction for pension savings?
In this case, your capital will not be taxable as a pension. To do this, you must request a document (No. 276 C1 (B)) from your tax office and submit it to your bank or insurance company.
Please note: even if you have benefited only once from the tax reduction for pension savings, you will be taxed at maturity on the entire capital.
Have you benefited from the tax reduction for pension savings?
If you obtain your capital (or the cash surrender value) before the age of 60, this capital is subject to personal income tax.
The capital or cash surrender values of savings insurance contracts which were used to replenish or guarantee a loan are still subject to personal income tax, even if you obtain them after the age of 60.
The tax rate varies depending on the circumstances of your situation.
Long-term savings tax
If you do not get your capital (or cash value) before the age of 60, your bank or insurance company will automatically levy a tax on long-term savings, and this, in principle, when you reach age 60, even if you don't actually get your capital (or cash value) at that time.
The levy of this tax constitutes the final taxation. Your capital will no longer be taxed, even if you make further payments afterwards
The rate of the long-term savings tax and when the long-term savings tax will be levied will vary depending on the circumstances of your situation.