In the post The Dutch pension system I talked about how the pension system works, in that post I mentioned that there is a possibility to save for your retirement through a pension account with tax benefits. This post explains more about those accounts.
The main benefit of saving in a pension account is the tax consideration. The money deposited here does not count towards box 3. In addition, contributions to the account are tax deductible, which means that when you make your annual return, the Belastingdienst will refund you between 37.07% and 49.50%, depending on the tax bracket you are in. When you reach retirement age, a preferential tax rate will be applied to this money. It is essential to note that funds cannot be withdrawn from the account until retirement age.
How much can I save? Jaarruimte
The Jaarruimte (annual margin) refers to the maximum amount of premiums paid that you can deduct from tax. In simple terms, it is the maximum annual amount you can set aside “tax-free” for your pension. The exact amount will depend on whether you are accruing pension through your employer. You can calculate your jaarruimte using the tool provided by the Belastingdienst. (https://www.belastingdienst.nl/wps/wcm/connect/nl/aftrek-en-kortingen/content/hulpmiddel-lijfrentepremie-2016-en-daarna)
It is also possible to use the jaarruimte from past years for your pension, this is called reserveringsruimte (reserve margin), the sum of the unused jaarruimte (annual margins) from the 7 years prior to the year from which you want to deduct pension contributions.Example: for 2024 the reserve margin is the sum of the unused annual reserves from 2017. In this way, you can continue to fill a possible “pension gap”.
Where can I open such an account?
You can open such an account with a bank, with a broker like Degiro or with a company like Brand New Day. I made a post dedicated to this pension account and you can read it here: Brand New Day Pension Account.