Saving for retirement in a nutshell
As a self-employed person, you are entitled to a limited statutory pension financed by the social security contributions you pay over the years. Every quarter, you build up a portion of your pension rights this way.
By 2030, the statutory retirement age in Belgium will be 67, with an additional career requirement of having worked for 45 years (or equivalent periods, such as study or illness).
As a self-employed person, your pension is on average considerably lower than that of a full-time employee. On average, the statutory pension of entrepreneurs these days is around 900 euros. Therefore, there are options for self-employed people to supplement the statutory pension with additional pension pillars, which supplement the state-guaranteed pension.
Saving for your retirement as a self-employed person: start early
The statutory pension scheme for the self-employed is relatively limited and usually insufficient to maintain your lifestyle. Saving additionally for your pension is therefore more urgent for those who run their own business than for salaried employees, who can usually count on a more generous statutory pension.
The earlier you start saving for retirement, the more you will benefit. This is due to the effect of compound interest, which accelerates the growth of your capital over time. A good beginning is half the battle - and that goes for your pension, too.
In addition, saving for your pension is also advantageous from a tax point of view. Over an entire career, savings can quickly add up.
Saving for retirement in different ways
There are various supplementary pension formulas for self-employed entrepreneurs, each with their own tax advantage. They can all be used as soon as you start your own business. This way, you maximise your pension savings at the end of the journey.
These are the three most common ones:
- Free Supplementary Pension for the Self-Employed (FSPSE)
- Individual Pension Commitment (IPC)
- Pension Agreement for the Self-Employed (PASE)
Free Supplementary Pension for the Self-Employed (FSPSE)
The FSPSE is a popular second pension pillar, which allows you, as a self-employed person, to build up a supplementary pension in a tax efficient manner. You can choose and adjust the annual amount to be saved, providing a flexible retirement savings method throughout your entire entrepreneurial career.
In addition to the ordinary FSPSE there is also a social FSPSE with additional cover, for example for long-term work incapacity or death.
Individual Pension Commitment (IPC)
Are you setting up a company? Then, in addition to the FSPSE, you can also save with the Individual Pension Commitment or IPC. In doing so, you set aside an additional amount through your company for when you retire. It’s a tax-efficient way of converting your business assets into private capital.
Pension Agreement for the Self-employed (PASE)
Entrepreneur without your own company? Then, the Pension Agreement for the Self-employed is an alternative to the IPC. For example, if you have started a sole proprietorship, you can enter into a supplementary pension agreement, in addition to the FSPSE. This, in turn, is also tax efficient and thus you save for an (even) better standard of living later on.
Saving for retirement at every career step
Have you just started working as a self-employed person and do you still have a long career ahead of you? Then it’s often more interesting to go for pension savings with a higher potential return (and higher risk). As you approach retirement age, you can opt for more security and peace of mind. Switching between types of pension savings and pension funds is permitted by law.
One thing is certain: start a smart retirement savings strategy as early as possible. Your future self will thank you!
Our Securex experts are happy to help you draw up a retirement plan that is appropriate to your company structure.
