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Benefits of the PLCI personal pension plan for self-employed individuals

3 min

By building up a pension pot now, you can prepare for your future while also getting a significant tax benefit today. Here's how the PLCI supplementary personal pension plan for self-employed individuals can help you do just that. 

The PLCI: a second-pillar pension solution 

In Belgium, the pension system consists of four “pillars”. As well as your future state pension (first pillar), you can have a supplementary plan in which you build up a pension pot as part of your career (second pillar), pension savings and long-term savings (third pillar), and individual savings without tax benefits (fourth pillar).

The PLCI supplementary personal pension plan for self-employed individuals falls within the second pillar of the pension system. It allows people who have a self-employed activity as their main occupation or on an ancillary basis (excluding starters*), as well as registered spousal caregivers and other caregivers, to build a pension pot to supplement their state pension.

The earlier you start, the larger your pension pot will be, which will enable you to bridge the gap between your current income and the amount of your future state pension.

Tax, social-security and property-related benefits

The PLCI is a particularly attractive solution for self-employed individuals. All premiums paid into your policy are tax-deductible as business expenses, which reduces your taxable profit. This means you pay not only less tax but also lower social-security contributions, which are linked to your taxable profit.

The PLCI: help with property financing 

It's worth bearing in mind that you can use your pension pot, i.e. the amount you’ve saved within the PLCI, before your statutory retirement date to purchase, build, renovate or refurbish a property in the European Economic Area.

How does the PLCI work?

The PLCI is a branch 21 insurance-based savings plan. Each premium you pay in accrues interest at a guaranteed rate and entitles you to a possible share of annual profits. The maximum amount of your premium is set each year based on a certain percentage of your reference self-employed income (your net taxable business income from three years ago, index-linked).

Do you want to pay in less than the maximum premium? That's possible: you’re free to choose the amount, subject to a minimum of €100 or 1% of your reference income. You can also pay your annual premium at a time that suits you, but the earlier you pay, the earlier you will benefit from the guaranteed interest rate. You can also opt to make payments monthly, quarterly or semi-annually.

You can also use your PLCI to provide greater protection for you and your loved ones. By opting for the social PLCI variant, you get benefits such as payments in the event of illness, inability to work or death, without having to undergo a medical examination. You also have the option to include additional death and inability-to-work cover in your policy. In addition to building up a pension pot, you will therefore benefit from tailored protection against loss of income due to illness or accident. And if you should die before your retirement age, you will enable your loved ones to maintain a comfortable standard of living.

In summary: the PLCI's advantages in 5 points

• Prepare for your future while enjoying tax benefits today: premiums are tax-deductible as business expenses, which reduces your taxable profit and so the amount of tax you pay.
• The PLCI also allows you to reduce your social security contributions.
• You don’t pay tax on the premiums you pay into the PLCI.
• You’re not required to make a payment into the PLCI every year.
• The PLCI can be combined with other forms of supplementary pension, such as the CPTI** pension plan for self-employed individuals who don’t run a company, traditional pension savings and long-term savings** (third pillar) or the EIP** company pension plan for self-employed people who run companies.

*A starter is a person who has been registered with the Banque-Carrefour des Entreprises (BCE) for less than 36 months.

**The Pension Invest Plan – PCLI (supplementary pension), Pension Invest Plan (long-term savings), CPTI pension plan for self-employed individuals and EIP company pension plan are branch-21 insurance products from AG.

AG Insurance SA/nv – 53 Boulevard Emile Jacqmain, B-1000 Brussels – RPM/RPR Brussels – VAT BE 0404.494.849 – http://www.aginsurance.be/. Accredited insurance company licenced under code number 0079, under the supervision of the National Bank of Belgium, 14 Boulevard de Berlaimont, B-1000 Brussels.

Intermediary: BNP Paribas Fortis SA/nv – 3 Montagne du Parc, B-1000 Brussels – RPM/RPR Brussels – VAT BE 0403.199.702, registered with the FSMA, 12-14 Rue du Congrès, B-1000 Brussels, under code number 025879 and acting as a contractually appointed insurance agent on behalf of AG Insurance SA/nv. BNP Paribas Fortis SA/nv holds a stake of more than 10% in AG Insurance SA/nv.