How are my pension savings taxed?

How are my pension savings taxed?

Anyone who declared their pension savings in their tax return and benefited from tax relief will be taxed on the capital accumulated.

When will my pension savings be taxed?

If you started saving for your pension before your 55th birthday, the rule

from 1 January 2015 is

You will have to pay a one-off final tax at a favourable rate of 8% on your 60th birthday.

Each year for five years, from 2015 to 2019, a final tax of 1% will be collected early (not applicable to new contracts taken out from 1 January 2015). The amounts of 1% collected early on the actual savings accumulated on 31 December 2014 will be deducted from the 8% final tax due at the age of 60.

After your 60th birthday, you can continue to save for your pension until the year in which you turn 64. You will still get 30% tax relief each year on deposits made after your 60th birthday, but you don't have to pay any final tax any more.

If you started saving for your pension on your 55th birthday or after that, the rule

from 1 January 2015 is

After ten years of the contract, you pay a one-off final tax at the favourable rate of 8%.

Each year for five years, from 2015 to 2019, a final tax of 1% will be collected early (not applicable to new contracts taken out from 1 January 2015). The amounts of 1% collected early on the actual savings accumulated on 31 December 2014 will be deducted from the 8% final tax.

If you only start saving for your pension at the age of 55 or later, you can keep making deposits until the year in which you turn 64. In that case, you can withdraw your pension savings at a tax-friendly rate at the earliest 10 years after the date your pension savings contract started.

On which amount is the final tax calculated?

  • Pension saving funds: on the savings. In that case, a notional return of 4.75% on the deposits is used. If the actual return ends up being higher, you don't have to pay tax on the surplus. The notional return for deposits made before 1992 is 6.25%.
  • Pension savings insurance plans: on the reserve or the capital. In that case, the guaranteed return on the premiums is used.

If you never benefited from tax relief on your pension savings, no final tax will be charged on them. In that case, you have to ask your local tax office for a document that you then have to submit to your financial institution or insurance company.

The system of taxation for private individuals applying to all payments of pension savings policies made before the age of 60 is not dealt with here.

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