When is the best time to start saving for a pension?

When is the best time to start saving for a pension?

Why start young?

When is the best time to start saving for a pension?

Pension saving is generally the last thing on the minds of young people starting out in their first job. Yet it's best to start saving now for later in life. Because the earlier you start, the more your efforts will pay off. Find out why you should start saving for your pension today.

Start planning for tomorrow today

Pension saving is generally the last thing on the minds of young people starting out in their first job. Yet it's best to start saving now for later in life. Because the earlier you start, the more your efforts will pay off. Find out why you should start saving for your pension today.

You benefit from tax relief

As soon as you start to work, you officially have to start paying taxes, too. If you save for your pension, you pay less in tax, because each year you get tax relief of 30%1 on the amount you put aside. For instance, if you save 900 euros during the year, you get back 270 euros. That's a nice little extra, don't you think? The maximum amount allowed for pension savings this year is 940 euros.

Opbrengst pensioensparen

You save over the long term

The tax benefit is a nice little extra, but the main advantage of starting to save for a pension early in life is that you save over a very long term.

  • Say you put aside a fixed amount every month from the age of 25
  • You'll have roughly four times more at the age of 65 than you would have if you only started at 45
This illustration2 therefore shows that the sooner you start saving for your pension, the larger the amount you should, in theory, receive when you retire.
 

You can save from as little as 10 euros

If you opt for a Pricos or Pricos Defensive plan, the minimum amount you have to put aside each month is 10 euros. So saving for your pension won't take much out of your budget. You decide yourself how much you want to put into the plan each month.

It's never too late!

waarom pensioensparen

Even if you start later in life, such as at the age of 50, it's still worthwhile putting aside savings for your pension. In that case, though, you won't have access to your money for 10 years so you'll need to bear that in mind.

Conditions of pension saving

You must meet certain conditions to benefit from the tax relief on pension savings. These are:

  • You must be at least 18 and less than 65 years old
  • The minimum term is 10 years
  • You must live in Belgium or another member state of the European Economic Area
  • You must be a taxpayer
pensioensparen als student

Can you save for your pension while studying

If you pay little or no taxes, you are not eligible for the tax relief of 30%. So it's not such a good idea to save for your pension while studying. If, after you graduate, you start to work in September, you should wait until the following year before you start saving for your pension, for the same tax reasons.

How do I start saving for my pension?

Around 2.9 million Belgians save for their pension. Some do that through a pension savings fund, others opt for pension savings insurance. The tax relief in both cases is the same.

Pension savings funds

  • Invest in shares and bonds
  • Generate a return that depends on the performance of the financial markets

Pension savings insurance

  • Offers a guaranteed minimum return on each deposit

If you are still young, it is a good idea to save through a pension savings fund, such as Pricos. The long-term return on this type of fund is generally higher than that generated by pension savings insurance and you still have enough time to absorb any negative results during the fund's term.

If as you approach retirement age, you want to make the capital you may have built up that little more secure, you can switch at no cost to the Pricos Defensive pension savings fund (which invests more in bonds).

The tax treatment depends on the each saver's personal situation and may change in the future.

The simulation uses an annualised return of 6%. This rate is for illustrative purposes only and provides no guarantee whatsoever of future returns. The tax treatment depends on the each saver's personal situation and may change in the future.

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