Tax and pension

Received your tax return? Pleasantly surprised or bummer?


Time to make your assets work for you instead of against you! Discover how to save up for your retirement and at the same time enjoy tax reductions granted by the government. Do you think you know all the different Belgian retirement saving plans? This article will enlighten you about all four. The Belgian pension system is built upon four evenly complementary pillars that offer you the possibility to maintain your way of life even after you have hung up your boots at your last employer. Unfortunately, current developments have shown that the state pension is insufficient to enable you to do so. Therefor it is vital to anticipate upon this in order to enjoy and maintain your unchanged buyer power.

1. State Pension

As touched upon, the first pillar of the Belgian pension system is the state pension. This constitutes of the monthly amount of money you receive from the state and for which you have been paying taxes during your career, be it as an employee, civil servant or a self-employed worker. This amount can of course vary based upon different criteria such as your ‘active years’, your salary and many others. This state pension however is almost never sufficient to maintain the life style the pensioner has been used to.

The Belgian Federal Pension Service however offers you an easy tool on their website that helps you find out when you will be able to retire and how much the monthly allowance will be.

There are of course three other pillars besides the state pension to amplify this amount.

2. Salary Advantages

The second pillar in the Belgian scheme is directly linked to the salary paid to you by your employer. Many employees and civil servants reap the benefits of a collective insurance or a pension fund in which their employers invest a part of their salary. In some fields of industry in Belgium, these systems are even mandatory because of collective labour agreements made between the employers and the unions. As said, the employer will invest a certain amount each month in order to build up capital that the employee will be able to access when he retires.

A collective insurance or a pension fund offers you an exceptionally interesting extrajudicial advantage, especially through the benefits that often accompany it such as a disability insurance or a death grant and many others.

Self-employed workers often have a relatively low state pension when compared to civil servants and employees. This is compensated by PLCI (Supplementary Free Pension for the Self-employed) which is also tax deductible as a professional expense for the self-employed person.

3. Personal Initiative

The third pillar constitutes of personal initiative by the worker. This is however strongly motivated by the Belgian government. The worker can, for example, sign in to a pension saving scheme at a privately owned financial institution and use this as a way to receive tax cuts.

In the current system, you can benefit from a tax reduction of up to 297 euro, which is the maximum amount that can be exempted in 2020. This is calculated as 30% of the total amount of pension money you have saved in 2020 with a maximum of 990 euro.

New as to last year however is the possibility to save up to 1270 euro of pension money instead of 990 euro. However, in this case, you will only receive a tax reduction of 25% instead of 30% as seen above. This tax cut is however only desirable if you save more than 1188 euro. If you stay below this number, it is best to keep it at 990 euro.

Through saving up in this third pillar, the chances of a comfortable and maintained life style after your retirement are augmented.

4. Saving without Tax Benefits

The fourth and last pillar consists of saving plans without tax benefits such as saving accounts, insurances, investment funds and others. It is of course also quite possible to invest in real estate and create a patrimony.

Caution: this article does not amount to binding, legal advice. This is merely a guideline to help you get answers to common questions. The Belgian Labour Law is too complicated to sum up in a short, readable article. If you have burning questions, don’t hesitate to contact your lawyer or union.



Heidi Vergauwe

Dedicated and meticulous Payroll & HR Advisor, always willing to go for the extra (s)mile!