What tax advantage does a pension plan offer me?

A third-pillar pension plan offers four tax advantages:

• Deduction within your jaarruimte. Your contribution falls under 'uitgaven voor inkomensvoorzieningen' and is deductible in box 1, provided you have a demonstrable pension shortfall. Since the Wtp (1 July 2023) the jaarruimte is 30% of your premiegrondslag, up from 13.3%. You deduct at your box 1 bracket rate, up to 49.50% in 2026.
• Catching up unused room. Unused jaarruimte from the past 10 years can still be used via your reserveringsruimte.
• Box 3 exemption. During the accrual phase your lijfrente capital does not count towards wealth tax.
• Deferred taxation. You only pay income tax once the benefit starts, often at a lower rate.

Note the flip side: if you surrender, pledge or gift the lijfrente, the Dutch tax authority treats this as negative uitgaven voor inkomensvoorzieningen. You repay the deduction previously received plus, usually, 20% revisierente. Calculate your room with the jaarruimte calculator.