Save for your pension with KBC
- Get up to 337.50 euros in tax relief
- Start saving from as little as 10 euros a month
- Build up additional retirement income
Paying less tax through pension saving – how does it work?
Pension saving involves setting aside a sum of money each year to help you maintain a decent standard of living when you retire. Many people do this because their state pension alone won’t stretch that far. The government encourages pension saving and has a system in place that lets you earn tax relief of up to 30% of what you save.
You can choose between two maximum amounts that qualify for tax relief:
- If you save up to 1,050 euroseuros a year (or 85 euros a month), you can claim back 30% of that amount in the form of tax relief (or a maximum of 315 euros).
Important: the less you save, the less tax relief you’ll get. That’s because the tax break is always equal to 30% of the amount you actually save.
- If you want to build up a bigger pension pot, save the higher maximum figure of 1,350 euros (roughly 110 euros a month) and get tax relief of 25% (or a maximum of 337.50 euros a year).
Important: if you choose this figure, be sure to save at least 1,260 euros, otherwise the amount of tax relief you get will be less than if you were to save the standard amount of 1,050 euros.
What can pension saving do for you?
The return depends on several things, including the product you go for. When you put your money into a pension savings fund, you invest in shares and bonds. You’re not guaranteed a fixed return on your investment, meaning you can make a profit or a loss. However, because the investments are well diversified and have a very long term (up until you retire), you stand to earn more money.
If you’re looking for more security, you should choose a pension savings insurance plan. Each deposit you make earns a guaranteed rate of interest right up until your contract ends. This may also be supplemented annually with a profit share, but that depends on the company’s results and therefore is not guaranteed.
The costs involved when saving for your pension
- Every time you make a deposit, you pay entry charges (applies to both products).
- If you opt for a pension savings fund, you also pay management fees because the fund invests in shares and bonds and is actively monitored.
- Both products are subject to a final tax, which you usually pay on your 60th birthday. If you start saving for your pension after turning 55, you only pay that tax after 10 years.
Note, however, that the exact amount of tax you pay will depend on your individual circumstances and can change in the future.
