Investing in today is building for tomorrow.
Work on your retirement as if it’s a journey to a destination full of financial freedom and independence. Specialists at Practical know the ins and outs of building towards your retirement.
Building towards your retirement may sound intriguing, but in reality, it's quite straightforward.
- Your investments follow fixed model portfolios crafted by our experts.
- Every euro you invest is automatically allocated to thousands of stocks or bonds.
- You receive a substantial portion (between 37% and 49%) of your contribution back from the Tax Authorities each year.
- No wealth tax applies to the money in your pension account.
- As your retirement approaches, we automatically reduce the risk.
How does a pension account work?
By having a pension account, you’re building your own secure pension fund. There’s flexibility in making deposits – no obligations – as long as they fall within your yearly limit. Calculating this limit is straightforward with the tool provided by the tax authorities based on your salary. Upon filing your tax return, you receive a refund ranging from 36.93% to 49.5% of the deposited annual limit. The funds in your pension account are designated for retirement and cannot be withdrawn at will. At retirement, you have the option to receive the funds as periodic gross income.
The advantages are substantial.
Utilizing your annual limit can lead to significant tax benefits.
The balance in the account is exempt from taxes. The amount in your pension account remains tax-free at all times. Unlike a regular savings or investment account where tax is due once the balance exceeds a certain limit, during the accumulation phase, you don’t pay tax on the money in the pension account.
The process is straightforward:
- Suppose your income is €40,000. In 2023, you'll pay 36.93% tax on that income.
- In 2024, you make a €3,000 deposit into your pension account.
- When you file your 2024 tax return for the 2023 tax year, you can reclaim the tax paid on the €3,000 deposit.
- You have the right to reclaim 36.93% (the previously paid tax amount). Your total tax benefit is thus €1,113, refunded by the Tax Authorities.
Remember:
The tax benefits depend on your personal situation. Factors such as your age, income, and current pension contributions influence the potential benefits. Additionally, these advantages may change in the future, for example, due to government legislative changes.
Interested?
Ready to start building your (supplementary) pension? Schedule an appointment with one of our specialists, and we’ll show you the possibilities.
