You can also (partly) do this yourself. Whether you are self-employed or employed. Renée puts money aside for her pension every month and explains how she goes about it.
It was on my list for years: arranging something for my pension. But to be honest it wasn’t at the top. Because where to start? I had to figure it out thoroughly, but I dreaded it like a mountain. I got older and older and knew: if I keep waiting, the chance that I will build up a nice pension becomes very small. Until one day I decided: enough was enough. I figured it out, opened a retirement investment account and automated everything, so that I have been consistently contributing money every month since then.
With tax benefit
In the Netherlands you can build up a pension with tax benefits. In practical terms, this means that you can deduct the money you put away for your pension from your income. Our tax system works like this: the higher your income, the more tax you pay. So if you can reduce your income on paper by deducting your pension contributions, you will ultimately pay less tax. It is important that you must meet certain conditions.
Too little pension
One of those conditions is that you have enough annual space. That is the amount that you can contribute annually to a personal pension pot with tax benefits. The amount depends on how much pension you have already accrued in the past. For example, are you self-employed and have you never done anything about pension? Then you probably still have a lot of room for years. But this will also be the case if you have not worked for a while, or if you are simply not building up much pension with your employer. The contribution you make, which falls within the amount of your annual allowance, can be deposited with a tax advantage. You can also invest more, but you will not get that benefit.
Calculate your annual space on the Tax Authorities website.
Sum
When I understood how it worked – yes, it took me a while too – I also understood how beneficial it was. Just a quick sum to clarify it for you too. Suppose you pay 36.93% tax on your income. You contribute €200 per month for your pension and may deduct this contribution from your income. Then you get back € 73.86 through saved tax (€ 200 x 36.93% =) and you actually only pay € 126.14 yourself.
Automate
To make it even easier for yourself, you can automate pension investing. And that’s what I chose. At Meesman – where we also invest regularly – you can open a pension investment account. Do you have enough annual space? Then you can deduct the contribution you make to this account. Please note: this money must remain fixed until your retirement age. And when you retire and start using the money, you pay income tax on it. You don’t get that money into your account all at once, but you buy a financial product that pays out periodically, for example per month. The tax you pay on this will probably be lower than now, because your income is lower and because as an older person in the Netherlands you pay less tax anyway.
Rosier
So for a few years now I have been putting money away for my pension every month. Money that grows steadily. My contribution is automatically debited, just like my other fixed costs. I have gotten used to the expense item and I like that I don’t have to worry about it anymore. It gives me peace of mind that I have arranged something and once a year I check how things are actually going. And that’s good, for now. I now see my old age a lot brighter than a few years ago. When I was still a self-employed person without a pension plan.
This article is a collaboration with Meesman. The content is 100% PorteRenee.
This article does not contain enough information to make an informed investment decision. For example, also read the Essential Information Document (EID) of an investment fund.