Are you a self-employed person searching for ways to build up a comfortable pension? Well, the Free Supplementary Pension for the Self-Employed (VAPZ) is an excellent option to achieve that goal. But did you know that there are two types: an ordinary PSPS and a social PSPS? Let’s dive into the details of these two variants and how they differ from each other. 🔎
The purpose of VAPZ 🎯
Whether you choose an ordinary PSPS or a social PSPS, the ultimate goal remains the same: build up a comfortable supplementary pension. With both formulas, you enjoy attractive tax benefits. 🚀
But there is more! The social PSPS formula offers an extra layer of protection for you as an entrepreneur. Besides pension accrual, you also get income insurance in case of disability, invalidity and maternity.
Maximum PSPS
Let’s look at the maximum contributions you can pay into each plan. An ordinary PSPS allows you to set aside up to 8.17% of your net taxable professional income from three years ago, with a maximum of €3,965.77 per year (maximum 2024). 💶
The social VAPZ, on the other hand, allows you to contribute up to 9.40% of that same income, with a ceiling of €4,562.82 per year (maximum 2024). That means you can potentially save more for retirement with the social formula!
Tip!
Curious about other ways to build up your pension as a self-employed person? Then view our article on types of supplementary pension!
The similarities between social PSPS and ordinary PSPS
Tax benefits VAPZ ✅
Both PSPS formulas are deductible as professional expenses, which is already good. These additional professional expenses mean you have less profit, which also means you pay less personal income tax. Less profit also means less social security contributions, of course.
Return 📈
Whether you choose an ordinary PSPS or a social PSPS, you enjoy a guaranteed return and variable profit sharing. That means your savings grow safely, but you can also benefit from additional returns if the underlying investments do well.
Final tax 💸
Both the ordinary PSPS and the social PSPS enjoy a favourable final tax when your pension capital is paid out. That would lead us a bit too far for now, but so know that there is a (favourable) final tax at the time you have the VAPZ paid out.
The differences between social VAPZ and ordinary VAPZ
Extra protection with a social VAPZ 🛡️
Here comes the big difference: with a social PSPS, you get extra income protection in case of disability and invalidity. If you are temporarily unable to work, you receive a monthly allowance. Moreover, your pension accrual continues even if you cannot pay premiums.
And there is more! During your maternity leave, you will also receive compensation, and when your child is born, you will receive a birth premium of €250.
Pension capital 🧑🦳
With a regular PSPS, 100% of your premiums are used to build up your pension. But with a social PSPS, 10% of your contributions go to a solidarity fund to finance the extra protection. The remaining 90% is used for your pension capital.
In summary: Social PSPS or ordinary PSPS?
Let’s list the main differences:
| Feature | Ordinary PSPS | Social PSPS |
|---|---|---|
| Maximum contribution | 8.17% of your income (max. €3,965.77 – figures 2024) | 9.40% of your income (max. €4,562.82 – figures 2024) |
| Income protection | No | Yes, in case of disability, invalidity and maternity |
| Pension accrual in case of disability | No | Yes |
| Birth contribution | No | €250 |
| Percentage for pension capital | 100% of your premiums | 90% of your premiums |
Both VAPZ formulas offer excellent tax benefits and guaranteed returns with profit sharing. But if you are searching for extra income protection and a higher maximum amount for pension accrual, the social VAPZ is certainly an attractive option. Remember, each company is unique, and the right choice depends from your specific situation. 🏆
Did you know.
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