1. The state pension
The maximum state pension (guaranteed by the Belgian government) is currently between (approximately) €2,180 for singles and €2,800 for families. Expats are unlikely to receive this amount form the Belgian Pension office, although state pension rights accrued elsewhere could offset the shortfall. Even those who spend their entire career in Belgium are unlikely to be comfortable getting by on an income that’s limited to state entitlements. This is where pillar two – pensions provided by employers – comes in.
2. Supplementary occupational pension
This pillar encompasses all the supplementary pension schemes linked to an occupational activity. An employee spending their entire career with the same employer can expect to retire on two-thirds of their final salary. There are different provisions for self-employed people (or supporting spouses) and employees. However, the idea of starting and ending a career with the same employer belongs to a bygone era, so for the vast majority it’s important to keep track of all the pension bits and pieces built-up with the different employees possible in different countries. Even two-thirds of one’s final salary may not suffice to continue one’s standard of living. With this in mind, the Belgian government introduced the third pillar: tax-deductible savings that can only be accessed at retirement age.
3. Personal pension savings with a tax break
As pillars one and two probably won’t give you a comfortable pension, the government encourages you to take matters into your own hands, through tax-deductible pension savings and long-term savings. These combined payments are limited to about €3,000 person a year and the investments are mainly managed by your bank. By regularly depositing money in a pension savings fund or life insurance, you are entitled to tax relief on your professional income of most often 30%. Self-employed individuals can also use pension savings to reduce their social contributions.
This brings us to pillar four: unrestricted, non-tax-deductible savings.
4. Voluntary personal savings with no tax break
Although there are no special tax breaks on this kind of “pension” savings, there are quite some other advantages attached to this scheme.
You can invest in such a way that savings grow tax-free and the entire fund can be taken out as a lump sum at any time. Investments are not restricted, so you are free to invest in the assets of your choice. In the current climate, where most EU governments are looking at ways to collect more taxes, it makes sense to accumulate at least part of your retirement funds in products that are not locked up until retirement.
(Photocredit: CC Peters)
Sorry, comments are closed for this item.