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In principle, these payments are taxable. However, you will rarely have to pay tax on benefits, because generally only the so-called income share is taxable. For example, if you become disabled at the age of 51 and the contract runs until the age of 65 (i.e. for another 14 years), the share of earnings is 14 percent.
With a monthly occupational disability pension of 2,000 euros, you would only have to pay tax on 280 euros. Since the basic tax-free amount is currently 862 euros per month (2022), no tax is currently due. However, any additional income is added, so that tax could still be due at the end of the day.
If, on the other hand, the occupational disability insurance is part of an occupational pension, the entire pension is taxable – after deduction of the usual allowances.
If the occupational disability insurance is part of a Rürup contract (basic pension), the taxable portion of the occupational disability pension increases gradually from currently 82 percent (2022) to 100 percent (2029).
At Horizon65 we can help you to determine if company pensions are worth it for you by using our mobile app to simulate its effect on your future taking into your existing investments and potential impact of inflation and taxation.
We regularly help our clients by comparing all the available company pension products on the market using our comparison portal or you can also directly get in touch with our experts to understand if it can be a good option for you.