Tax Trap: 2.300 Belgians Put Too Much Into Their Pension Savings Fund Last Year

Recent data from the Federal Public Service Finance shows that 2.339 people were between 2024 and 1.020 euro and deposited €1.224 into their pension savings account or insurance. As a result, they received a smaller tax reduction than if they had contributed less. This is due to the two existing ceilings within the pension savings system.

In 2024, a deposit of up to €1.020 entitled you to a tax reduction of 30 percent of the total deposited amount. For deposits exceeding this amount, up to a maximum of €1.310, the tax benefit was only 25 percent.

The risks of the two-track system

Pension savers who contribute more than €1.020 but less than €1.224 will receive a smaller tax reduction than savers who limit their contribution to €1.020. This two-pronged system therefore entails risks. For example, with a contribution of €1.100 in 2024, the saver will receive a tax reduction of €275 (25% of €1.100), while a contribution of €1.020 will yield a tax benefit of €306 (30% of €1.020).

Indexed thresholds and future freezing

In 2025, the thresholds will be higher thanks to an indexation to adjust them to the inflationDespite the government's decision to freeze various taxable amounts at their 2029 levels until 2024, the third pillar pension is not yet subject to this. However, starting next year, the ceilings will be fixed for several years.

This year, individuals can contribute up to €1.050 to benefit from the 30 percent tax reduction, and up to €1.350 if they wish to contribute more, but with a tax benefit limited to 25 percent. Anyone who contributes more than €1.050 but less than €1.260 this year could fall into a tax trap.

The Federal Public Service Finance warns on its website that the 25 percent tax benefit is only beneficial if more than €1.260 is saved by 2025. Despite this warning, more than 2.000 Belgians fall into the trap of not contributing enough to fully benefit from the system each year.

Finally, the figures show that the higher ceiling is becoming increasingly less popular. Fewer than 91.500 taxpayers opted for it in 2024, compared to more than 92.500 in 2023, almost 99.000 in 2022, and more than 100.000 in 2021.

Frequently Asked Questions

How many people fell into the tax trap of the third pillar pension last year?
The data shows that 2.339 people paid too much into their pension savings fund last year, resulting in a smaller tax reduction.

What are the risks of the two-track system?
The two-track system means that pension savers who contribute more than €1.020 but less than €1.224 will receive a smaller tax reduction than savers who limit their contribution to €1.020.

What is the advice of the Federal Public Service Finance for 2025?
The Federal Public Service Finance advises that the 25 percent tax benefit is only beneficial if more than 1.260 euros is saved in 2025.