New pension law widens annuities
We have had a new pension law since July 1, 2023. The pension rules have undergone a major overhaul to make sure the system fits the current times. One of the changes has to do with annuities. Entrepreneurs, self-employed people and employees now have more tax space to build up extra savings for retirement.
More space
The new rules give room to save more or longer with tax advantages. We highlight three key changes:
- The annual tax allowance for deducting annuity premiums will be increased to thirty percent of the income you use to save for your retirement. This applies retroactively from January 1, 2023. The condition is that you have a pension shortfall. That is, after retirement you will not be able to live the way you do now.
The maximum deductible amount has also increased. This amount depends on your age. - You can retroactively use the annual margin for deduction of annuity premiums. Previously this could be done up to seven years back, nowadays up to ten years back. Also, the maximum deductible amount has increased considerably; however, there is a maximum.
- You can still make contributions for additional annuities up to five years after reaching the state pension age. Previously, you could do so until you reach the state pension age.
Annuity; what about it?
"Annuity insurance is a common form. You pay a monthly premium and at some point - for example, when you retire - you can have the amount paid out periodically. The premium you pay is income tax deductible. Thus, it provides tax benefits.
The annuity insurance payments are taxed, though. Only if you have it paid out from the state pension date, you may pay less tax because your income is lower."
Petri de Rechter
Advisor Wealth and Insurance at Alpina Roerdalen
Think about it now
It may still be a long time away, but it's good to start thinking now about your finances after retirement age. That way you won't be faced with - unpleasant - surprises later. Do you have any questions? We would be happy to help you with personal advice.
