Spaargids.beNowhere in the industrialized world are elderly people as dependent on their statutory pension as in our country. For people over 65, this represents 85.8 percent of their income. Given the financial situation of the Belgian state, this situation appears to be under pressure. How can you respond intelligently to this? Spaargids.be Provides tips.
The Belgian retired at the age of 61.1 years
Considered by the Organization for Economic Cooperation and Development, OECD Pension report The situation in its 38 member states. It showed that in 2022, Belgians over 65 were dependent on the pension they receive from the government for nearly 86 percent of their income. This has never been higher anywhere else. The countries where this closely matched the Belgian figures were Luxembourg (83.1%), Austria (82.3%) and Finland (80.3%). This was much lower in neighboring countries such as France (78.1%), Germany (68%) and the Netherlands (42.7%).
One of the reasons why people over 65 in our country rely so heavily on the statutory pension is their rapid exit from the labor market. On average, Belgians retire at the age of 61.1 years. Only in Luxembourg (60.5%) and France (60.7%) do they do this faster. The Germans postpone it until the age of 63.7, and the Dutch until the age of 65. Japan and Iceland top the rankings. On average, citizens there do not retire until age 68.3.
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Owning your own home is the best form of retirement savings
The heavy reliance on the statutory pension poses major challenges to our country. We are in trouble. The aging wave will mean that more people will retire in the coming years, causing public spending to pay for pensions to rise from just over 12% of our country's national income to more than 15%. At the same time, the Belgian state's finances provide little room for significant additional spending, and social deductions on wages are already high.
This means that future retirees will have to rely more on themselves. A positive aspect in this context is that more than 70% of Belgians already own their own home, which means that this group does not have to pay rent from their pensions. Owning your own home is often viewed as the best form of retirement savings.
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83% have group insurance or VAPZ
In addition, a growing number of Belgians can count on the additional retirement capital they accumulate during their active careers. This is already the case for 4.346 million citizens, equivalent to 83% of the working population. They do this through group insurance, a free supplementary pension for employees (VAPW), a free supplementary pension for self-employed people (VAPZ), or an individual pension obligation (IPT).
A recent study by the FSMA showed that the average reserve earned for those building up a supplementary pension and approaching retirement age – the age group from 55 to 64 years – is €58,997. However, this global average hides significant differences. For half of the participants, the amount does not exceed 10,115 euros. There is also a big difference between men and women. As for men, the average earned reserve for this age group is 73,929 euros. This is double the average of €37,561 for women.
Employees automatically join their employer's pension plan, while the self-employed must sponsor their own supplementary pension. The most convenient formula for most of them is the Free Supplementary Pension for the Self-Employed (VAPZ). They can deposit up to 8.17 percent of their net professional income from three years ago, up to a maximum of €3,965.77 for 2024. They can then deduct the deposited amount from their income so that they are taxed at a lower amount. Therefore, it provides a tax benefit at the rate of the higher bracket in which it falls.
Pension savings: tax reduction of up to 30%
Regardless of work status, there are a number of other formulas for building up an additional pension near retirement age. They are also encouraged financially.
The most popular is retirement savings, where you can choose between two formulas. The first option is savings insurance with an insurance company. In this case, you will receive a guaranteed basic return, possibly supplemented by a share of the profit if the insurance company can reinvest your deposit at a profit and its financial position allows it. In other words: your saved capital can never decrease.
The other option is to choose a retirement savings fund at a bank or a branch 23 investment insurance policy with an insurance company. In this case, your deposit will be invested in a fund with bonds and stocks. The return then depends entirely on the development of these bonds and stocks. This means that it can be positive (strongly), but also negative (strongly) if stock markets are negative.
Those who participate will receive a reduction in the taxes they have to pay. If you deposit up to €1,020, the discount will be 30 percent of the deposited amount. For an amount between €1,020 and a maximum of €1,310, this is a tax reduction of 25 percent of the amount paid.
€735 tax benefit through long-term savings
Another tax-advantaged formula is long-term saving. You can get this from the insurance company through what is called a Section 21 savings insurance policy. This guarantees you a basic interest rate on your deposits. In addition, you can get a share of the profit if the company is able to reinvest your deposit at a profit and its financial situation allows this. The same system as with retirement savings insurance.
The amounts you spend on long-term savings qualify for a tax deduction. This is equivalent to 30 percent of the deposited amounts. Anyone who deposits the absolute maximum of €2,450 must pay €735 less in tax.
Save or invest freely
Of course, creating an additional personal savings reserve is not limited to group insurance, VAPZ, pension savings and long-term savings. You can also build a buffer for your old age through traditional saving and investing or purchasing real estate.
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