What monthly pension savings for a maximum return?

You have just started your career or have already taken your first steps in the job market. You know all too well that you shouldn't leave anything to chance to ensure you can enjoy life to the fullest after you retire. How much should you be putting into your monthly pension savings?

In this blog, we take a closer look at what a young person like you can set aside in the pension savings system per month. We also highlight the interesting tax benefits this brings and demonstrate how to stay in full control of your pension savings at all times.

Why pension savings are so popular

First and foremost, pension savings are a lucrative routine to get into for yourself. They get you into the habit of setting a significant amount aside for your future each month in a safe, controlled way. After a while, it simply becomes matter of course. This is both reassuring for yourself and sends a clear signal to your partner and/or family members that recurring savings are a smart move.

Why are pension savings so lucrative? Two reasons:

• Pension savings are very interesting from a tax perspective
• The longer you accrue pension savings, the higher your return will be

Just how much can you put into your pension savings per month?

There is no such thing as a minimum amount for your pension savings, only an upper limit. The maximum amounts for building pension savings with optimal tax relief are set each year. If you stick to them, you will literally earn back part of your invested amount in annual tax relief on your personal income. The maximum amounts are currently as follows:

• 85 euros per month or 1,020 euros per year
• 109.17 euros per month or 1,310 euros per year (limits indexed in 2024)

Paying 85 euros per month or 1,020 euros per year into your pension savings plan is the best option from a tax perspective. This means you recover 30% of your savings, so you will get 306 euros back when the year is over.

If you can afford to save a little more each month and you exceed the annual limit of 1,310 euros, the tax relief is still 25% – or 327.50 euros.

You decide for yourself how much you pay into your pension savings account each month. You will always be in control.

What if you don't save these exact amounts?

You decide how much you put into your pension savings each month, taking into account the above tax limits. Please note, however, that as soon as you exceed 1,020 euros per year, the tax relief falls from 30 to 25%.

If you do choose to do this, it is best to deposit at least 1,224 euros per year into your pension savings account. If the amount you put in is between 1,020 euros and 1,224 euros, your tax relief will be less than if you deposit 900 euros per year, for example.

In practice, even if you deposit just 1 euro over the limit, you may lose tens of euros in taxes. So please ask your banking advisor for more information.

Can you put in a different amount without notifying the bank?

As mentioned above, you decide how much you deposit into your pension savings account each month. You are always in control. One month may be very different from another.

However, if you have agreed with your bank to save 1,020 or 1,310 euros per year for tax reasons, you do need to submit an official application for an adjustment. If this doesn't happen and you suddenly deposit 20 euros more per month for example, your bank will return this amount. You therefore need to make proper arrangements with your bank.

Anticipate and ensure a maximum return for your investment

Starting your pension savings at a young age comes with several advantages. The main benefit is the power of compound interest, which means you earn interest on the money you save, but also on the interest you earn along the way. As a result, the small amount that you start saving at a young age can grow significantly over the years.

Combine this with

• The high degree of flexibility in terms of the deposited amounts
• The choice between pension savings plans with lower and higher risks and corresponding returns
• The continuous tax relief
• The opportunity to reinvest your return…

... you can rest assured you have a secure, highly flexible financial plan in place that will allow you to conclude your professional career with peace of mind.

Find out all about pension savings for young people at Keytrade Bank

Pension savings are an essential part of financial planning, especially for young people. By starting early, you can take full advantage of the power of tax relief and compound interest. During that entire period, you can save at a pace that suits your life at that particular time.

Start saving for your retirement today and take an important step towards your future financial security.

Read more about pension savings for youth