You’re probably aware that pensions for the self-employed are not particularly high. That’s why it’s wise to think about putting a little aside yourself. The Voluntary Supplementary Pension Scheme for the Self-Employed (VSPSS, or PLCI in French and VAPZ in Dutch) offers a tax-efficient way to supplement your legal pension.
In this article, we detail everything you need to know about the VSPSS, the difference between the VSPSS and the social VSPSS or the Pension Agreement for the Self-Employed (PASE, or CPTI in French and POZ in Dutch), as well as the advantages and disadvantages of these options to increase your pension as a self-employed person.
What is the voluntary supplementary pension scheme for the self-employed (VSPSS)?
Considering that the statutory pension for the self-employed is generally low, it may be wise to put some money aside for your retirement. The VSPSS gives you the possibility to build up additional pension capital in a tax-efficient way, allowing you to maintain your standard of living once you retire.
Who is this kind of pension for?
The supplementary pension scheme for the self-employed is intended for all self-employed people in Belgium, including sole proprietorships, companies, and assisting spouses.
People who are self-employed in a secondary occupation can also participate, which is an interesting option if you plan to become self-employed in a primary occupation in the future. However, there are two conditions to respect here:
- If you’re self-employed in a secondary occupation, you must pay at least the minimum social security contribution for someone who is self-employed in a primary occupation (€890.51 per quarter in 2024).
- You must have been registered as self-employed in a secondary occupation for at least three full years.
If you have a full-time job and perform your additional self-employed activity outside your regular working hours, it’s likely that your minimum social security contribution will be lower, thereby not meeting the first condition. In this case, you benefit from a legal pension from your employer, which you can supplement with group insurance or a pension fund from your employer.
How does the VSPSS work?
The voluntary supplementary pension scheme for the self-employed is very flexible and adapts to all budgets. You decide the amount you want to contribute, up to a maximum of 8.17% of your net professional income.
The maximum premium is based on your income three years ago or on your social security contributions. In 2024, the maximum contribution for the VSPSS is €3,965.77, and the minimum is €100, with annual indexation.
You can pay the premium monthly, quarterly or annually. These contributions are tax deductible as professional expenses, thus offering a double advantage: you save for the future while optimising your taxes and social security contributions.
In addition, you can use part of your accumulated capital for real estate projects. Upon retirement, you benefit from an advantageous tax rate on the capital saved.
For company directors, it’s possible to combine the VSPSS with an Individual Pension Commitment (IPC, or EIP in French and IPT in Dutch) for even more advantages. The VSPSS has a minimum duration of five years and is paid as of the legal retirement age.
What are the advantages of the VSPSS?
1. Tax advantages and reduced social security contributions:
You can recover up to 70% of your savings thanks to the tax reduction. This saving, combined with the reduction in social security contributions, makes the VSPSS a financially attractive option for pension savings.
2. Flexibility in savings:
The VSPSS offers the freedom to decide how much and how often you save. This flexibility allows you to adjust your savings according to your financial situation and your future plans.
For example:
Your net professional income is €30,000. You can contribute 8.17% to the VSPSS, which is equivalent to approximately €2,451. This amount can be paid annually to the VSPSS, and you can choose to pay it all at once or distribute it quarterly or monthly. In addition, the amount is tax deductible, which reduces your net income and therefore your social security contributions.
3. Supplement to your legal pension:
The VSPSS allows the self-employed to supplement their legal pension, which is essential given that the pensions of the self-employed are often lower than those of employees or civil servants.
4. Advance for real estate projects:
Another remarkable advantage of the VSPSS is the possibility of requesting an advance for real estate projects.
What’s the difference between a VSPSS, an IPC and a PASE?
Understanding the differences between the VSPSS, the IPC, and the PASE is crucial for self-employed people who want to optimise their supplementary pension. These schemes all aim to accumulate a supplementary retirement capital, but differ in the following ways:
• The VSPSS is open to all self-employed people.
• The IPC targets self-employed people with a company.
• The PASE is specifically for self-employed people who don’t have a company.
The VSPSS and the IPC offer similar advantages, such as the possibility of obtaining a real estate loan and additional guarantees. However, there are important differences in terms of who pays the premiums and who benefits from them, as well as the tax benefits of each plan.
Main differences
The VSPSS and the IPC differ mainly in their tax advantages and how the premiums are paid. With the VSPSS, the self-employed person manages the premiums themself, which can offer a tax advantage of up to 63%. For the IPC, which is managed by the self-employed person’s company, the tax advantage varies between 20% and 25%.
There are also differences in terms of taxes on the premiums, the maximum annual contribution, and retirement taxes. The VSPSS doesn’t apply a tax on premiums and has an annual limit based on taxable income. IPC premiums, on the other hand, are subject to a 4.4% tax and allow higher contributions thanks to the 80% rule.
In addition, the IPC allows ‘back service’, which is not the case with the VSPSS. In terms of the type of investment, the VSPSS is limited to branch 21, while the IPC can invest in both branch 21 and branch 23.
Investing in the future
The voluntary supplementary pension scheme for the self-employed offers self-employed people an interesting opportunity to supplement their future pension in a tax-efficient way. The tax benefits, the flexibility of savings, and the possibility of applying for a loan for real estate projects are all good reasons to consider contributing to a VSPSS.
What about you, when are you going to start investing in your future? 😉
Frequently asked questions about the VSPSS for self-employed in Belgium
The minimum pension for a self-employed person in Belgium with a career of 45 years is €1,637 (gross) for a single person and €2,045.60 (gross) for a family pension. To increase your pension, you can save for your retirement or invest in a VSPSS, which is tax-efficient.
This may come as a surprise, but the legal pension of a self-employed person in Belgium is lower than that of an employee due to the lower social security contributions paid by self-employed people, a key element in calculating the pension.
In addition to the standard VSPSS benefits, the social VSPSS offers additional social coverage, such as compensation in the event of incapacity for work or death coverage. Although the tax advantages are similar to the standard VSPSS, the social VSPSS offers additional security for the self-employed.
