What tax advantage does a pension plan offer me?

A third pillar pension provides the following benefits:

Deduction of premiums within your annual allowance

You can fiscally deduct the premiums you pay for your annuity from your taxable income. Since 1 January 2023, the annual allowance has been increased to 30% of the part of your income you save for a pension (previously 13.3%), allowing you to contribute much more and directly reduce your tax burden.

Catch-up of unused allowance from previous years

Unused annual allowance from the previous 10 years may still be used for extra pension contributions (previously 7 years). You can thus utilise a significant “catch-up allowance” to make up for what you missed out on earlier.

Box 3 exemption during accumulation

The capital you accumulate within an annuity contract does not fall into Box 3. This means that your savings and investments for your pension in this third pillar do not count towards wealth tax.

Deferred tax liability

Income tax is only levied when your annuity payout begins, often in a lower tax bracket than during your working years, because your income is generally lower then.