What is the Independent Supplementary Pension for the Self-Employed and what are its benefits?

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As an entrepreneur, you strive for financial security and a comfortable retirement. The Independent Supplementary Pension for the Self-Employed (“VAPZ” in Dutch and hereafter) provides a solid basis for achieving this goal. In this article, we dive deeper into what VAPZ entails and what benefits it can offer you as a self-employed person.

What is VAPZ?

VAPZ is a retirement savings formula designed specifically for entrepreneurs in Belgium. It allows you to build up a supplementary pension on top of the statutory pension. By paying an annual insurance premium, which is then invested, you generate a supplementary income for later.

Why choose VAPZ?

There are several reasons why the VAPZ is an attractive option for entrepreneurs:

  • Guaranteed return: VAPZ contributions are invested in Branch 21 (“Tak 21”) insurance policies, known for their guaranteed returns. In Belgium, this type of investment is also protected by the Guarantee Fund, providing additional security.
  • Tax advantages: A significant advantage of VAPZ is tax deductibility. The premiums you pay reduce your net taxable income. This leads to lower social security contributions and direct tax savings.
  • Full deductibility: As already mentioned, the premiums paid are 100% deductible from your taxes. This means your taxable income decreases, resulting in lower taxes. This deductibility makes the VAPZ a very efficient way to save for retirement.

Are there any limits on the VAPZ?

Although VAPZ offers many benefits, there are also some limits on the amounts you can deposit:

  • The annual premium must be at least €100.
  • The maximum amount is 8.17% of your income, with a ceiling of €3,965.77 in 2024. If 8.17% of your income exceeds this ceiling, the maximum deduction is limited to €3,965.77.

For entrepreneurs who are already making the maximum contribution to their VAPZ and want to save further, a Pension Agreement for the Self-Employed (POZ) may be the next step.

What are the retirement benefit options?

Upon reaching retirement age, you have the choice of receiving the accrued capital and interest all at once or opting for an annuity paid periodically. This flexibility allows you to adjust your retirement income according to your personal needs.

Special consideration for people who are self-employed as a secondary activity

People who are self-employed as a secondary activity who pay social contributions equal to those of a self-employed person in a main occupation can also benefit from VAPZ. This offers a unique opportunity to build up a supplementary pension even as a secondary professional.

VAPZ is a smart choice for any entrepreneur!

The Independent Supplementary Pension for the Self-Employed (VAPZ) offers a secure and tax-efficient way to build a comfortable retirement as an entrepreneur. With the possibility of a guaranteed return, significant tax advantages and flexibility in pension benefits, it is an essential pillar for your financial future.

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