Blog Ondernemers

Want to boost your statutory pension?

This is how!
Entrepreneurs | 21 October 2020 | Written by Herman Boonen

That entrepreneurs cannot expect a high pension amount at their retirement age is nothing new. After years of hard work, the average statutory pension for entrepreneurs in Belgium is only 900 euros. So, not a huge amount for maintaining your current standard of living.

Want to boost your statutory pension?
But, don't worry. To meet this requirement, Belgian legislation provides different ways to supplement your statutory pension with different types of pension insurance. It is interesting to note that these may yield an important tax benefit for you.
Interesting fact: did you know that there are currently political discussions currently in progress with a view to increasing the statutory pension for the self-employed to € 1,500 per month? Something positive to look forward to!

The choice of the type of pension insurance strongly depends on the status of your company and the company form. In order to know what pension capital you will earn at retirement, you also have to take into account that the duration, the amount of the premium payments and the choice of your investment form will have an influence on your future pension amount.

What additional savings options are there?In addition to the statutory pension for the self-employed, there are therefore many options for supplementing your pension. Depending on your situation, one option will suit you better than another. We list the options for you:

1. The Free Complementary Pension for the Self-Employed (FCPSE)An important part of the supplementary pension for the self-employed is the Free Complementary Pension for Self-Employed, or FCPSE. This option can be taken by entrepreneurs as a primary or secondary occupation and is also possible for assisting spouses.

A characteristic of this option is that all premiums you deposit are 100% deductible as a professional expense. This not only has the advantage that the base for your taxes is reduced, but also the base for the calculation of your social contributions. So, quite interesting! 

Additional advantages of the FCPSE are the absence of tax on the premiums paid and a highly favourable 
Interesting fact: did you know that the tax authorities have decided to allow the FCPSE premiums to be tax deductible in 2020? This especially for entrepreneurs who requested a deferment of payment of their social security contributions due to the corona crisis. The advantage of this is that the pension accrual is therefore not jeopardized, and your intended final capital remains feasible.

2. The Individual Pension Commitment (IPC)Are you active as a company? Then the Individual Pension Commitment is a very interesting second option. Did you even know that any manager or director who receives regular remuneration from the company can also benefit from the IPC?

Your IPC contract is always signed and paid for by the company. Here, too, the premiums are 100% deductible as a business expense for the company, which in turn reduces corporate tax. 

Note, however that for this option, you should take into account that you may only accrue 80% supplementary pension. This means that when you reach retirement age, your income may not exceed 80% of your last normal gross annual salary when you were still working.

3. The Pension Agreement for the Self-Employed (PASE)Since 2018, self-employed persons who do not work under a company can also appeal to the Pension Agreement for the Self-Employed. This savings option was created to give self-employed people additional options. It is, as it were, the IPC for one-man businesses.

The PASE is certainly a nice extra for increasing your pension. However, you should consider that this option is limited to a maximum of 30% tax relief via your personal income tax.

Both for the IPC and for the PASE it is possible to deposit separate premiums based on your past income. In technical terms, we sometimes call this the “back service” or “purchase price”. In this way you can significantly supplement your pension capital through one-off payments.

Did you even know that you can withdraw an advance on this under certain conditions? This can be for the acquisition, construction, repair or conversion of real estate within the European Economic Area. Interesting, isn't it?

What is a good savings option for me?Clearly, there are many options for supplementing your statutory pension. But the big question remains of course: which one suits you best? Discover that now through our pension simulator. Here you will receive a personal simulation of your potential final capital at your retirement age. 

An additional income for a carefree old age?

Discover the solution that suits you best with our simulator

Go to the simulation tool

The results of your simulation can be used for the further refinement and adjustment of your retirement savings plan. Depending on your specific and individual situation, our experts can work out a fully personalized plan for you.

The return on your supplementary pensionNaturally you want to get as much return as possible from your supplementary pension savings. You certainly can! Let's take a look at the three most important elements for a high return capital:

1. The interest ratesThe first element in the return on your supplementary pension is the interest rates. Traditionally, the savings options for supplementing your statutory pension have a guaranteed interest rate. For the specialists among us, this is also known under ‘investing in Branch 21’.

2. The profit sharingA second important aspect of return is the profit sharing of the chosen pension saving option. Each insurer can determine what percentage of its profit sharing it will allocate each year to the insurance products. Of course, the profit sharing is not guaranteed, unlike the guaranteed interest rates.
Interesting fact: in 2019, Securex allocated a profit sharing of 0.95% for all contracts with an annual interest rate. This is for contracts with a total gross return of 2.10% for all deposits in that year. In the current financial context, therefore, a very good percentage.

3. The possibility of investingA third option to increase your returns is to invest in insurance funds. This type of investment is also known as Branch 23 investment. With a Branch 23 investment, you combine an investment with your supplementary pension savings. This type of investment is very attractive from a tax point of view and certainly a suitable way to do asset planning. Obviously, there is no return or capital guarantee as your money is partially invested. However, given the current interest rates, there is certainly the chance of a higher return.

It is therefore clear: as an entrepreneur you can build up a nice extra pension on top of your statutory pension. Are you curious what this means for you? Then let our pension simulator do its job.

Would you like an analysis for your specific situation? Do you want to take the first step towards better pension accrual? Be sure to contact our experts.