Retirement

What can you expect from your pension as a self-employed person?

Does the government provide a pension for the self-employed? How much is such a pension? Can I simulate it myself? And are there ways to supplement it?

According to the OECD, the statutory pension in Belgium is on average 38.1% lower than the final salary (net). The fall is even greater for entrepreneurs, as their pensions are in any case lower than those of employees. Find out more about the statutory pension for self-employed people here. 

Is there a statutory minimum pension for the self-employed?

Yes, there is. After a career of 45 years, the guaranteed minimum pension for a single self-employed person amounts to €1,502.78 gross per month. The minimum family pension amounts to €1,877.89 per month. But to be entitled to the minimum pension, you must have a career of at least 30 years. If your career is shorter, your pension is calculated on the basis of your occupational income. Suppose you have a 33-year career as a self-employed person, your statutory pension will be 33/45 of the above amount.

Not every self-employed person has always been self-employed. If you were also employed for some time, you may qualify for a guaranteed minimum pension for a mixed career. A condition is that you worked for at least two thirds of a full career (45 years). When calculating the guaranteed minimum pension, each scheme takes into account the number of years completed in that scheme.

An example

Suppose you have 25 career years as an employee and 15 as a self-employed person in main occupation. Then your guaranteed minimum pension as a worker will be calculated as 25/45 of the minimum pension for workers, plus 15/45 of the minimum pension for self-employed workers (however, these amounts are the same for both schemes).

Please note: if you receive a higher pension amount than the minimum as an employee, you are not entitled to the integral guaranteed minimum pension as a self-employed person. Suppose that you, as a single person, receive a pension of €1,000 for your career of 25 years as an employee, instead of the minimum pension of €834.88 (because you had a high salary, for example). You would also theoretically receive €500.93 minimum pension for your 15 years of self-employment. However, the sum (€1,000 + €500.93) of both exceeds the maximum guaranteed minimum income of €1,335.81 (€834.88 + €500.93). The difference (€165.12) will then be deducted from the monthly minimum that you receive as a self-employed person. 

As you can see, calculating your pension is complicated, and there are many rules. Fortunately, there is a handy tool that calculates your pension for you: on MyPension.be (fr) you can both simulate your statutory pension and monitor the status of your supplementary pension. 

Statutory pension is not enough: start an ordinary or social FSPSE

A statutory pension is not very high. So building up your own pension is the message, especially as an entrepreneur. An extra snack for the thirst and at the same time a tax advantage is possible with a Free Supplementary Pension for the Self-Employed, in short FSPSE.

A FSPSE is accessible for entrepreneurs with a company as well as for self-employed persons without a company. There are two types of FSPSE: an ordinary FSPSE and a social FSPSE.

Differences between ordinary FSPSE and social FSPSE

In an ordinary FSPSE, you can annually deposit up to 8.17% of your net taxable income (with a ceiling of €3,447.62 in 2022). That money goes into a branch-21 product. Branch 21 products offer a guaranteed interest rate, possibly supplemented by a profit share. The amounts paid are tax-deductible as professional expenses. As a result, you pay less in taxes and social contributions. Contrary to group insurance (for employees) or life insurance, you do not pay any premium tax on the payments into a FSPSE.

A social FSPSE is based on the same principles as an ordinary FSPSE, but there are differences. The amount you can deposit is higher: 9.4% of your net taxable income (ceiling of €3,966.67 in 2022). 10 percent of the amount you deposit goes towards covering social risks. Exactly what is covered depends on the provider. As standard, you (and your family) enjoy extra income protection in the event of, among other things, incapacity for work, maternity and death.

What exactly does a (social) FSPSE provide?

When your capital is paid out, a tax is levied. Depending on your retirement age, a fictitious interest rate is used for this, which varies from 3.5 to 5%. You must then declare this fictitious interest on your tax return for 10 years (if you retire at or after 65) or 13 years (if you retire before 65). You then pay tax on this amount according to the progressive personal tax brackets.

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