Camille Van Vyve
27 Feb 2024
Pension savings payment: what options for your capital?
In Belgium, pension savings, also known as the third pillar of pensions, allows individuals to build up supplementary retirement savings individually. This tax-advantaged formula is widely used. But what to do once the time comes to access this capital? Leave it with the institution where the contract was signed or, on the contrary, liquidate the contract to reinvest this amount elsewhere more effectively?
How to subscribe to a pension savings plan in Belgium?
There are three ways to subscribe to a pension savings plan. The most common is to opt for a pension savings fund, marketed by banks, consisting of stocks and bonds, without guaranteed returns. There is also a pension savings insurance formula, sold by insurers, with guaranteed returns. Finally, it is possible to individually open a securities account whose allocation complies with the legal framework to which pension savings is subject, but few venture down this path.
Tax Advantage: new caps for pension savings in 2024
The calculation is not simple and varies depending on the amount of contributions. In 2024 (declaration 2025), you have the choice between:
- the "classic" regime: maximum €1.020 with a tax reduction of 30% of the amount paid in (maximum €306)
- the new regime: maximum €1.310 with a tax reduction of 25% of the amount paid in (maximum €327,50)
It is not possible to make contributions for a higher amount; however, there is no minimum amount to contribute. Be careful: if you exceed the cap of €1.020, the tax reduction automatically decreases from 30% to 25%. This excess is only advantageous if you contribute an amount higher than €1.225.
When to access pension savings
Pension savings contractssmust run for at least 10 years. Amounts can only be released from the age of at least 60, subject to the payment of an exit tax currently set at 8%. Amounts saved between your 60th and 65th birthday are no longer taxed, but if you continue to save beyond 65, the tax advantage will not be maintained. There is therefore little interest in continuing to pay premiums into a pension savings plan after 65, knowing that these funds are constrained in their allocation by strict regulations.
Accessing your pension savings before the maturity date
It is possible to access your pension savings before 60, or before the end of the minimum 10-year period, but this is strongly discouraged. Unless the liquidation occurs due to death or actual retirement (up to 5 years before the normal date), the liquidated capital will likely be subject to a tax of 33%. Unless there is an urgent need for liquidity, this maneuver is therefore best avoided.
What to do once pension savings is accessed
If you meet the conditions to benefit from the 8% exit tax rate, you can retrieve the accumulated capital in a tax-advantaged manner for your retirement. The institution with which you have taken out the pension savings plan will naturally be a candidate to continue managing these funds, but there could be less expensive and more profitable alternatives.
Maximize your returns and minimize your costs
Easyvest offers its clients and prospective clients the opportunity to analyze the performance of their investment portfolios held with other financial institutions. In 2023, out of the 120 audits we conducted, over 90% of the portfolios had a performance over 5 years lower than what would have been achieved with our index approach. And on average, the fees charged on these portfolios were twice as high as those charged by Easyvest! These are two good reasons to consider a change of manager once pension savings is accessed.
The best investment strategy for your pension
Obviously, you don't invest the same way at 40 as you do at 60. Once pension savings are accessed, it is advisable to establish the best possible investment strategy to reap the rewards of your past efforts while preserving your capital as much as possible. Easyvest can advise you on developing, for example, an annuity portfolio, built with an optimal allocation given your situation.
Simulate reinvesting your pension savings
Are you soon able to access the accumulated capital in your pension savings or group insurance? Be proactive and already simulate the investment of these amounts on our website. Depending on your personal situation and financial goals (enhancing your lifestyle in retirement, preparing your estate, etc.), our managers will advise you on the best strategy to follow.