A proverbial bomb dropped recently in the circle of experts who calculate supplementary pensions for the self-employed. On 31 March, the tax administration published a circular raising the statutory pension estimate for the self-employed from 25% to 50%! One might argue this is a logical consequence of the change in how statutory pension is calculated. From 2021, the career years are no longer reduced by a rounded-off factor of 0.7 so the calculation is the same as for wage earners. This adjustment factor was originally the ratio between the social security contributions for the statutory pensions of the self-employed and wage earners. As the self-employed paid less in contributions, they also received less pension. Because of numerous social security reforms, this adjustment factor became obsolete, and the equalisation of statutory pensions for the self-employed and wage earners – albeit partially – is also in keeping with the government’s objective of a minimum statutory pension of €1,500.
Specifically, for career years starting in 2021, the statutory pension must thus be estimated at 50% of the income (capped at €73,454.56), with a minimum statutory pension of €17,332.35. For a self-employed person’s career years before 2021, the estimate may be kept at 25% of the income frozen for 2020 (always subject to the minimum statutory pensions). For many self-employed, this increased statutory pension estimate will lead to a lower margin for supplementary pensions under the established 80% rule, and consequently to lower, tax-deductible contributions.
From a practical perspective, insurers’ calculation programs are obviously not yet adapted to this significant change, which, moreover, will apply retroactively from the 2022 assessment year (based on 2021 income).
The last word on this has not been said or written yet. We look forward to working constructively with the tax administration, which Assuralia has invited to obtain additional clarifications and to see if agreements can be reached.
That said, a more fundamental and clearer revision of the 80% rule, based on the information available in My Pension, seems more appropriate in the longer term than continuing to adapt and reinterpret an old, outdated rule that no longer corresponds to reality. We can only but hope this will happen.