The government has decided to create an incentive measure whereby only the self-employed are offered the opportunity to build up a pension with a not inconsiderable tax benefit, namely the “Private Supplementary Pension for the Self-Employed”.
An attractive plan from a tax viewpoint
Your PSPSE (private supplementary pension for the self-employed) premiums are deductible — your tax benefit can reach 43%.
Fewer social security contributions
You can save up to 19.65% of your payments — your social security contributions are calculated based on your income after the deduction of your pension plan payments. If you have a private supplementary pension for the self-employed, you will then pay your social security contributions on a smaller income.
In combination with other types of pension, you can always grow your annual tax benefit by linking your PSPSE with long-term savings, retirement savings and individual pension scheme.
Favourable taxation of the capital at maturity
When you reach retirement age and your PSPSE capital is paid out to you, this pay out will enjoy a special tax regime. In fact, Inland Revenue will not tax your retirement lump sum in one go in the year of the pay out, but as a percentage of the pay out over a given period (= notional annuity).
This percentage and the duration of the period depend on the beneficiary’s age.
If this were a survivor’s pension, this percentage would depend on the age of the beneficiary at the time of your death as the insured.
An attractive return
Your payments will benefit from a high basic interest rate and you will also enjoy a bonus. The capitalisation and bonus help to obtain a particularly high return.
Your PSPSE is a tailored death insurance — should you die before retirement, your loved ones will immediately receive a capital lump sum determined by you.
However, in the event of an accidental death, your loved ones will be able to get an additional capital amount for their protection.
In addition to your PSPSE, you can also arrange a disability annuity with favourable terms and conditions.
You can thus opt for death cover that can be tailored, and you can designate the beneficiary of your choice for this particular death cover.
A plan that is particularly flexible
You save at your own pace and determine what premium amount you want to pay. The premium amount will be a maximum of 8.17% of the professional income on which your social security contributions are calculated, in other words your net professional income from 3 years ago, adjusted, with a minimum of 600 Euros. You are however at liberty to not pay such “hefty” premiums for your first 3 years of self-employment. Besides you could adjust the percentage at any time, at your own pace, since you determine the frequency of your payments.