Are you self-employed? Then you should be aware that your statutory pension will not be enough to maintain your standard of living once you reach the age of retirement. You must therefore think about building up a supplementary pension on your own. Several possibilities (pension savings, long-term savings, IPA if you are in a company, the Pension Commitment for the Self-employed (PCS) if you work without a company (as of 1 July 2018) etc.) exist for you in this case, but a Private Supplementary Pension for the Self-employed is without a doubt the number one option. Let us explain why.
A Private Supplementary Pension for the Self-employed, or PSPS, is a very interesting product to help self-employed people to build up a supplementary pension. The premiums are tax deductible and allow you to pay less taxes as well as less social security charges.
You have the choice between a classic PSPS and a social PSPS. What is the difference between the two?
- With a 'classic' PSPS, you are able to pay premiums of a maximum of 8.17% of the income for which you pay social security charges. Furthermore, there is an absolute ceiling of €3,127.24 (2017 income, 2018 tax declaration) and of €3,187.04 for income earned in 2018 (tax declaration 2019) .
- With a 'social' PSPS, you are able to pay a higher premium, i.e. 9.40% of the income for which you pay social contributions. The absolute maximum in this case is €3,598.05 (2017 income, 2018 tax declaration) and €3.666,85 for income earned in 2018 (2019 tax declaration). In the framework of a social PSPS, not only do you build up a supplementary pension capital, but you also benefit from supplementary coverage, such as a guarantee in the case of work incapacity and/or death.
The premiums for your PSPS are normally paid in your own name. The premiums for a PSPS are tax exempt. You might also have your company pay the premiums, but they would therefore be taxed as a benefit in kind. The final tax is advantageous through the system of notional income.
Who can take out a PSPS? People who are self-employed as a main profession (also starters) or a supplementary profession (if the social contributions paid are identical to those of a person who is self-employed as a main profession, not a starter), as well as assisting spouses with the 'maxi-status'. People over the age of 65 who benefit from a statutory pension can no longer take out a PSPS.