No group insurance plan? What are the alternatives?

Group insurance is an attractive formula. Your employer pays a monthly amount into a pension fund or pension insurance plan. And in most cases, they'll also deduct part of your salary to pay into that pot, meaning you join forces to grow your retirement savings. Once you retire, you can gain access to all the funds in that pot. With a pension insurance policy, you're also entitled to a statutory minimum return.

In addition to employers, governments can also offer their permanent civil servants a group insurance plan. But what about the hundreds of thousands of employees, civil servants and self-employed people who fall through the cracks? Or what if you do have a group insurance plan, but it's rather meagre?

1. Employees

Since 2019, anyone who doesn't have group insurance (or who only has minor group insurance) has been able to subscribe to a Private Supplementary Pension for Employees (PLCS/VAPW). All you need to do is ask your employer, who will then transfer part of your salary to a pension institution. The annual amount may not exceed €1,600 or 3% of the gross salary you received two years previously. A major disadvantage is that you don't benefit from a statutory minimum return with a PLCS/VAPW.

2. Self-employed

For the self-employed, there are solutions such as a Private Supplementary Pension for the Self-Employed (PLCI/VAPZ), a Pension Agreement for the Self-Employed (CPTI/POZ) or an Individual Pension Agreement (EIP/IPT). Contributions are tax-deductible subject to certain conditions. And depending on the formula, you may enjoy a guaranteed minimum return, just like a standard group insurance plan.

3. Civil servants

There is no alternative form of group insurance for public civil servants. In some cases, a government authority may offer group insurance to its permanent civil servants.

How is your pension built up?

In Belgium, we have four types, or pillars of pensions:

• ● First pillar: the state pension. This is the pension you receive from the government.
• ● Second pillar: a supplementary pension. These are group insurance policies and their alternatives such as PLCS/VAPW, PLCI/VAPZ, CPTI/POZ and EIP/IPT.
• ● Third pillar: individual pension savings with tax benefits. You can pay up to €1,290 per year into a pension savings fund.
• ● Fourth pillar: your own savings, investments in real estate, etc.

Will you have enough later on in life?

New studies and surveys focusing on what Belgians think about their pensions are published on a regular basis. However, their conclusions are always the same: over and over again, the majority of Belgians overestimate how much they will receive as their pension.

Although the first three pillars already provide a foundation, they may not be enough to maintain your standard of living later on. Especially if you can't build up reserves today via a group insurance plan or another alternative in the second pillar.

Unless you've worked as a permanent civil servant for decades, there's usually no option other than to take the initiative yourself: pension savings (third pillar) and savings and/or investments (fourth pillar).

How to build up a little more in the fourth pillar

Savings haven't provided any returns for years, and investing in additional real estate means shelling out a large amount in one go. That's why it can be more attractive to look at investments for your pension. Under an investment plan, you set aside an amount every month or quarter. This money is then invested in one or more investment funds . An investment plan has a number of benefits:

• You don't need to invest your money all in one go, but little by little. This allows you to take advantage of price fluctuations on the financial markets.
• You invest in investment funds, which are managed by a team of investment specialists.
• Funds are made up of several different shares and/or bonds, so you don't put all your eggs in one basket.
• You invest at your own pace: €50 a month, €1,000 a quarter or €200 a year. The choice is yours. You can stop or pause these investments at any time.
• Investing involves higher risks than saving, but historically, investing yields a higher return than saving over the long term. Note, however, that past performance is no guarantee of future results.

Want to get started with an investment plan?

You can do so with an amount starting from as little as €25 a month. Run a simulation now.

Group insurance is an attractive formula. Your employer pays a monthly amount into a pension fund or pension insurance plan. And in most cases, they'll also deduct part of your salary to pay into that pot, meaning you join forces to grow your retirement savings. Once you retire, you can gain access to all the funds in that pot. With a pension insurance policy, you're also entitled to a statutory minimum return.

In addition to employers, governments can also offer their permanent civil servants a group insurance plan. But what about the hundreds of thousands of employees, civil servants and self-employed people who fall through the cracks? Or what if you do have a group insurance plan, but it's rather meagre?

1. Employees

Since 2019, anyone who doesn't have group insurance (or who only has minor group insurance) has been able to subscribe to a Private Supplementary Pension for Employees (PLCS/VAPW). All you need to do is ask your employer, who will then transfer part of your salary to a pension institution. The annual amount may not exceed €1,600 or 3% of the gross salary you received two years previously. A major disadvantage is that you don't benefit from a statutory minimum return with a PLCS/VAPW.

2. Self-employed

For the self-employed, there are solutions such as a Private Supplementary Pension for the Self-Employed (PLCI/VAPZ), a Pension Agreement for the Self-Employed (CPTI/POZ) or an Individual Pension Agreement (EIP/IPT). Contributions are tax-deductible subject to certain conditions. And depending on the formula, you may enjoy a guaranteed minimum return, just like a standard group insurance plan.

3. Civil servants

There is no alternative form of group insurance for public civil servants. In some cases, a government authority may offer group insurance to its permanent civil servants.

How is your pension built up?

In Belgium, we have four types, or pillars of pensions:

• ● First pillar: the state pension. This is the pension you receive from the government.
• ● Second pillar: a supplementary pension. These are group insurance policies and their alternatives such as PLCS/VAPW, PLCI/VAPZ, CPTI/POZ and EIP/IPT.
• ● Third pillar: individual pension savings with tax benefits. You can pay up to €1,290 per year into a pension savings fund.
• ● Fourth pillar: your own savings, investments in real estate, etc.

Will you have enough later on in life?

New studies and surveys focusing on what Belgians think about their pensions are published on a regular basis. However, their conclusions are always the same: over and over again, the majority of Belgians overestimate how much they will receive as their pension.

Although the first three pillars already provide a foundation, they may not be enough to maintain your standard of living later on. Especially if you can't build up reserves today via a group insurance plan or another alternative in the second pillar.

Unless you've worked as a permanent civil servant for decades, there's usually no option other than to take the initiative yourself: pension savings (third pillar) and savings and/or investments (fourth pillar).

How to build up a little more in the fourth pillar

Savings haven't provided any returns for years, and investing in additional real estate means shelling out a large amount in one go. That's why it can be more attractive to look at investments for your pension. Under an investment plan, you set aside an amount every month or quarter. This money is then invested in one or more investment funds . An investment plan has a number of benefits:

• You don't need to invest your money all in one go, but little by little. This allows you to take advantage of price fluctuations on the financial markets.
• You invest in investment funds, which are managed by a team of investment specialists.
• Funds are made up of several different shares and/or bonds, so you don't put all your eggs in one basket.
• You invest at your own pace: €50 a month, €1,000 a quarter or €200 a year. The choice is yours. You can stop or pause these investments at any time.
• Investing involves higher risks than saving, but historically, investing yields a higher return than saving over the long term. Note, however, that past performance is no guarantee of future results.

Want to get started with an investment plan?

You can do so with an amount starting from as little as €25 a month. Run a simulation now.