- Flexibility to suit many specific needs from inheritance planning to asset protection
- Cross-border expertise for tax-efficient relocation
- Stability and security of a Luxembourg contract
- Dedicated Belgian market experts designing compliant and customised solutions
- Number 1 life insurance company in the Belgian market
The Belgian Pension System
The pension system in Belgium revolves around three pillars. A statutory “legal” public pension system exists alongside supplementary “extra-legal” pensions and individual pension savings plans with tax incentives. Additionally, individual pension savings plans without tax incentives are sometimes referred to as the “fourth pillar”. Since Belgium has one of the lowest basic pensions in Europe, understanding the pension system is key in successful wealth planning.
First pillar: the statutory “legal” pension
The funding of the public pensions is based on a repartitioning “pay-as-you-go” system. In other words, today’s pension payments are financed by social security contributions currently paid by the employed, self-employed and civil servants. Payment of a Belgian legal pension begins when you are 65 years of age and have worked a minimum of 40 years throughout your career. However, the government agreed to raise the retirement age to 66 in 2025 and to 67 in 2030, and the minimum years worked will increase to at least 42 years by 2019. As living entirely from your statutory pension is not deemed realistic, supplementary pension provisions will be necessary.
Second pillar: the supplementary “extra-legal” pension
The second pillar consists of an occupational pension scheme that supplements the statutory pension of the first pillar. The occupational pension scheme is funded by employers through a (group) insurance scheme or a pension fund and is fully discretionary. Employers are under no obligation to grant this “extra-legal” benefit. By definition, the amount is variable. Self-employed persons can also use the supplementary “extra-legal” pension. They can opt for the supplementary pension for independents (“VAPZ/PCLI” and/or “RIZIV/INAMI”) or the individual pension commitment (“IPT/EIP”). These plans allow self-employed persons to build up a capital sum to top-up their statutory pension and they offer considerable tax advantages.
Third pillar: the individual pension savings plan with tax incentives
Even with a supplementary “extra-legal” pension, it will not be possible for most retirees to maintain their living standard. Therefore, the Belgian legislator created tax incentives to save towards retirement through tax-deductible pension savings plans, pension savings funds and long-term savings. These individual discretionary savings consist of recurring contributions subject to tax relief and they result in an accrued interest-yielding lump sum paid out upon retirement.
Individual pension savings plan without tax incentives
Traditional savings, sometimes referred to as the “fourth pillar”, do not offer tax relief but they help to ensure an adequate post-retirement income.
In particular, Luxembourgish branch 21 and branch 23 type unit-linked life assurance offer a range of opportunities for Belgian residents as instruments for wealth planning. The so-called branch 21 contracts offer a guaranteed benefit, while the benefit of a branch 23 contract is linked to the evolution of the value of one or more investment funds. These contracts enable an estate planning solution that results in both capital growth and savings on inheritance tax.
OneLife is the biggest Luxembourg based company in the Belgian life insurance market, with over 3 bn Euros assets under administration. We anticipated and quickly embraced changes brought about by Twin Peaks II legislation in 2014, which strengthened consumer protection rules to ensure greater transparency and clarity for clients.
A multi-fund, multi-manager solution using unit-linked life assurance policies or capital redemption bonds. Set up a personalised portfolio within an open architecture system giving you access to more than 200 investment funds, carefully selected and managed by fund houses chosen for the quality of their products and their management.
Choose from four investment options so that you can optimise your portfolio to suit you.
- Secure gains when markets rise
- Protect savings when markets fall
- Minimise risk by entering the markets gradually
Life assurance means your savings can grow over the long term as well as providing extra flexibility.
A Branch 23 life assurance or capital redemption product that gives you access to an extensive range of investment options. The premium is invested in a personalised asset portfolio, and the policy is entirely customised for you and managed by an asset manager, chosen by you, to suit your evolving risk and investment preferences and your personal and financial goals.
OneLife Pension Belgium
OneLife Pension Belgium is an innovative, tax efficient, tailor-made, multi-support solution which demonstrates the importance for self-employed individuals of an additional retirement income. This is due to the fact that usually their average monthly statutory pension income is significantly lower than that of private and public sector employees, whilst life expectancy after retirement is on the increase.
Contact our Belgium team