Comparison belgium pension savings formulas

January 6, 2019 1 By admin

Now that I have made detailed cases for three tax-advantage pension saving schemes, let’s summarize the three formulas in an easy overview.

The detailed posts can be found here:

 Pension SavingVAPZIPT
Savings amount per year (€)9608.17 % of taxable income; for an income of 36 k / year that's 2941 €Magic 80 % rule - typical 3600 € / Year
Fund TypeTAK21 (interests) or TAK23 (Invest)Only TAK21 (saving / interests)TAK21 or TAK23
Entry Fee (to the bank)3 %3 %2 %
Tax advantage (at entry)310 * 960 = 32 %Up to 53.8 % (depends on tax bracket and city tax)
(ignores RSZ discount because it is eliminated by lower state pension)
Avoid 20,4 % company tax + 30 % RV = 44,3 %
You pay 4.4 % taxes at entry
Fund average return7.0 %1.2 %7 % (TAK 23)
Money available atAge 60legal retirement age (67)Age 65 (at 10 % taxes)
Taxes8 % on deposit + on virtual 4,75 %
Taxed at age 60.
Half of the savings are taxed at highest bracket. Typically 40 % x 0.5 = 20 % taxes on savings
+3,55 % RIZIV
+ 2 % solidarity
10% at retirement
+3,55 % RIZIV
+ 2 % solidarity
Annual Total Return before inflation8,1 %2,2 %- 0,9 % on the pre-tax (gross) company money (3211/3600)
+ 3.7 % on post-tax money (3211/2006)
Annual Total Real Return (Inflation adjusted)5,2 %-0,6 %- 4,0 % on the pre-tax (gross) company money
+ 0.5 % on post-tax money

VAPZ and IPT are not really favorable savings formulas are they? They protect against inflation and encourage you to save. That’s it. They are NOT the fantastic tax-advantageous savings formulas for your retirement:

  • VAPZ is only available in the interest-savings fund TAK21, which makes you lose all your money by melting it away by inflation. By the time you retire, you have to pay the 40 % taxes anyway (+3.5 % + 2 %), which is something most banks simply avoid to tell you.
  • IPT does not offer you any tax discount at the start, it even imposes a new additional tax at the start (4,4%) (+ 2 % commission to the bank). You do avoid extra company profit taxes and RV, but you have to pay 10 % taxes (+ 3.5 % + 2 %) at the end. The loss of 6.4 % at the start and 10 % at the end takes away most of the tax benefits.
  • Only ‘Individual Pension Saving’ seems any good, because taxes at entry are zero AND you can invest in a proper (stock market) fund. 8 % taxes in total. Plus 30 % tax benefit at the start. After 56 there is even a larger advantage.