Tax deductible pension savings plans

The pension savings plans allow you to compensate fully or partially (depending on the amount paid in) the gap between your last salary and the (lower) pension received. In addition, during the savings accumulation phase, you can deduct the premiums paid into the pension savings plan up to an annual limit of € 3,200.

These savings plans are contracted by an insurance company in connection with a bank where the saved money is invested. Most pension savings plans offer different possibilities on how the savings are invested. The classic option offers a conservative interest based approach; the dynamic product offers the possibility to invest partially into investment funds for expected higher returns. The allocation between cash, bonds and shares within the investment funds depends on your investment strategy and the legal framework: the older you become the smaller the percentage of securities in your pension scheme can be.

Arrived at maturity (usually at retirement age) the pension savings plan will start paying out benefits. The payout is possible as a combination of the following two options: your can have the benefits of your pension savings plan paid out as a monthly payment which will run until death; or as a single one shot payment (the one shot payment can constitute maximum 50% of the contracted pension amount). And in case there are still funds in the scheme at the moment of death, the rest of the saved amount will be paid out to the beneficiaries stipulated in the contract (spouse, children, grandchildren…).

In the event of death before the end of the contract or before payment of the full amount of the savings and under certain conditions, your beneficiary or your surviving spouse may receive the savings accumulated or the amount outstanding.

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