Pension savings plan: what happens in the event of death?
You make payments towards your pension savings plan for many years, but die before being able to take advantage of it. Who will receive your capital? And what role will the tax authorities play in this?
Capital
The capital which will be distributed among your heirs after your death will depend on the type of pension savings plan. The savings from a pension savings fund will provide an amount calculated as follows:
premiums paid + added value - fees - tax
The savings from a pension savings insurance will provide an amount calculated as follows:
premiums paid + (guaranteed) rate + possible bonus with branch 21 - fees - tax
Tax benefit,but...
A pension savings plan entitles you to a tax benefit. In 2018, you were able to make payments of up to 1,230 euros in order to obtain a tax benefit. In exchange, when you turn 60, you will have to pay an 8% tax (advance payment) on the capital saved. This tax applies to the payments made after 1993. For the payments before 1993, the tax rate is 16.5%. After your 60th birthday, it will still be possible for you to save until age 64 without having to pay any taxes, while maintaining your tax benefit.
The age of death of the person will therefore determine the amount of tax. In the event of death after age 60, the advance payment will already have been paid and the tax authorities will have received their share. In the event of death before age 60, the advance payment will have to be paid at the time of death.
Inheritance tax
After the person's death, the capital saved will be distributed among the heirs. If the deceased had a pension savings fund, the capital saved becomes part of the estate and the heirs will have to pay inheritance tax on it. The capital saved with pension savings insurance will not become part of the estate, but will nevertheless be subject to inheritance tax.
When the testator dies, his/her accounts are blocked so that the distribution of assets is carried out in favour of the heirs. First, the financial institution will have to communicate all bank assets and debts to the tax authorities. Afterwards, the bank will make the money available to the heirs.
Beneficiaryin the event of...
If you save for retirement with a pension savings insurance policy, you must designate the beneficiary of the capital in your contract.
The beneficiary in the case of survival: this will be you.
The beneficiary in the case of death: you must designate someone who will receive the capital from your insurance company when you die. In order to receive a tax benefit on your pension savings insurance, the beneficiary in the case of death must be as follows:
· for pension savings insurance which is not used as a guarantee or for the reconstitution of a mortgage loan: the spouse or the legal cohabitant, or relatives up to the second degree;
· for pension savings insurance which is used as a guarantee or for the reconstitution of a mortgage loan: the people who, following the death of the insured, acquire full ownership or usufruct of the property and for the rest of the capital, the spouse, legal cohabitant or relatives up to the second degree.
With a pension savings fund, the capital saved becomes part of the estate directly.
Your broker will be happy to answer all of your questions regarding pension savings. Here, you may find out everything you need to know about NN pension savings insurance.
