Changes to income tax rates in boxes 1 and 2. A new system for calculating your income from savings and investments (box 3). Lower corporation tax rates, which, as it turns out, are not going ahead after all. A pension agreement and pension funds that are having to make cuts. Paying interest on your savings account. Enough tax and economic developments to prompt you to review your financial planning once again.
A much smaller pension
In recent years, there has been a great deal of focus on the funding ratios of pension funds. And recently, the newspapers were full of reports following the pension agreement reached after lengthy negotiations.
But even setting these important issues aside, the pension payments received by people who are in the accrual phase of their pension will be relatively lower than those of current pensioners. After all, pensions have not been accrued on the basis of final salary for a long time now. At best, an average of your salary still forms the basis for your pension accrual. Much more often, however, the employer pays a contribution which is used to purchase a pension entitlement on the retirement date (defined contribution scheme).
If you expect your income to be lower after retirement due to reduced pension payments, you will need to draw on your savings. You should take this into account in your financial planning right now. You will need to set aside a portion of your net income to build up savings that you can draw on later.
Another point to consider regarding pensions is the income of your surviving dependants. As survivors’ pensions are now almost always insured on a risk-based basis, there is by no means always (sufficient) income for your surviving dependants after your death.
ZZP-ers
As self-employed individuals, ZZP workers are responsible for building up their own retirement provision. After all, pension entitlements are only accrued by employees. The possibility of self-employed people accruing a pension is still being debated in political circles. It is clear that, for self-employed people, financial planning is, if anything, even more important than it is for employees.
Paying interest on your savings
It seems we cannot escape negative interest rates on our savings accounts. But even now, savings rates are already so low that you cannot factor in any return when planning your finances. Fortunately, there are other ways to invest your savings, but these usually involve higher risks.
For savers, the rate of income tax in box 3 (income from savings and investments) will be reduced. However, more income tax will be payable on assets other than savings balances. The intention is for this change to come into effect on 1 January 2022. We explain this in our article Savings of up to €440,000 are tax-free.
If your savings are held in a savings company, it looks as though it will be able to continue operating, at least until the end of 2021.
Planning
Of course, the future remains uncertain, but that has always been the case. The best way to plan your finances depends on your personal circumstances and wishes.
It is important to keep a close eye on things. You can do this by drawing up a financial plan and regularly reviewing it critically in the light of your current situation and wishes, taking into account changes in tax and economic conditions.