The one-off final tax on pension savings
2 min
What is the final tax and what are the implications for your pension savings and your long-term savings?
What is the one-off final tax on pension savings?
Unfortunately, you must also pay a one-off final tax on your pension savings. If you started saving before your 55th birthday, you will have to pay 8% tax on your savings in the year you turn 60.
After that, you will still qualify for a tax reduction on all your payments, but they will not be taxed. Did you take out a pension savings plan before or in 2014? If so, you have already paid some of the final tax upfront between 2015 and 2019. These advance payments will be deducted from the final tax due on your 60th birthday.
Is there a one-off final tax on long-term savings?
A one-off final tax is also withheld from your long-term savings in the year you turn 60, if you started saving before the age of 55. This tax amounts to 10%. As with pension savings, you still qualify for a tax advantage after this date, but your payments will not be taxed. What is the difference between the two? After your 64th birthday, you can no longer make payments towards your pension savings. However, you can continue to make payments into your long-term savings if your contract provides for this.
What if you start saving after your 55th birthday?
Did you start saving before your 55th birthday? In that case, the final tax will not be deducted when you turn 60, but in the tenth year of your contract. This means that you will enjoy fewer years of tax-advantaged savings.
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