The tax-shift, a good thing for pensioners!

The revaluations decided in the context of the welfare envelope and the measures pertaining to the tax-shift will increase pensioners’ purchasing power »

BRUSSELS – This week parliament will debate the tax-shift. In addition to the measures which are beneficial to the active population the Minister for Pensions, Daniel BACQUELAINE, stresses that the tax-shift will also have a positive impact on vast numbers of pensioners. He gives four examples.

The abolition of the 30% tax bracket will impact over a million pensioners who will be able to enjoy a tax rebate up to EUR 184. Moreover, it is planned that as from 2016 an additional EUR 50 million will be spent on the revaluation of the lowest pensions in particular.

These important measures implement a series of decisions the government made for the benefit of pensioners. Thanks to its decision to again allocate the full 100% of the welfare envelope, the government has improved a lot of pensioners’ purchasing power. In particular pensioners with small pensions. Therefore, almost half a billion euros will be spent on the revaluation of pensions in 2015 and 2016, double the amounts reserved for pensions in 2013-2014!

In May 2015 pensioners already saw a 15% rise in their holiday allowance compared to the amounts allocated in 2012.

On 1st June 2015 the minimum pension for persons having had a mixed career as an employee and a freelancer was – insofar as the part worked as an employee is concerned  – put on par with the minimum pension for employees. 

On 1st September 2015 new increases were implemented : the minimum pension for employees and freelancers, the income guarantee for the elderly and the amounts paid as guaranteed income for the elderly were increased by 2%. The pensions which came into effect prior to 1995 were increased by 2%.

Within a few days, on 1st January 2016, the pensions which came into effect in 2011 will in turn be increased by 2%. 

For the rest the differences between the minimum pensions for freelances and those for employees will be evened out as from 1st August 2016.

Examples:

1) Since 1st April 2010 Sabine  has received a gross taxable pension for single. On 1^st January 2015 her gross taxable pension amounted to EUR  18,000.

Welfare adjustment

In May 2015 the holiday allowance was increased and it rose from EUR 668.64 to EUR 708.04, being a gross increase by EUR 39.40 €. Since Sabine’s pension came into effect in 2010, this was increased by 2% in September 2015.  From now on she will receive a gross annual pension of EUR 18,360. Het entire net pension (including the holiday allowance) has risen from EUR 16,673.30 to EUR 16,912.94

Tax-shift

The abolition of the 30% tax bracket will result in Sabine being able to benefit from a EUR 184 tax rebate. 

è Total net gain = EUR 423.64 

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2) Since 1st September 2009 and following a career of 40 years Robert has received a minimum family pension. On 1st January 2015 his gross taxable pension amounted to EUR  14,973.08. 

Welfare adjustment

In May 2015 his holiday allowance was increased and it rose from EUR 835.81 to EUR 885.07, being an increase by EUR 46.26. Since Robert’s pension is a minimum pension, it was also increased by 2% in September 2015. From now on his pension will be 15,272.59 € per year.

Tax-shift

For Robert nothing changes.  He did not pay any taxes and he will not have to pay any as a result of the abolition of the 30% tax bracket.

è Total net gain  = EUR 348.77

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3) Since 1st November 2012 Thomas has received a minimum family pension following a 27 year career as an employee and a 14 year career as a freelancer (mixed career). On 1st January 2015 his gross taxable pension amounted to EUR  14,332.31 per year. 

Welfare adjustment

In May 2015 his holiday allowance was raised from EUR 822.80 to 871.29, being an increase by EUR 48.49. Since Thomas’ pension is a minimum pension for a mixed career, he has also benefited from a special increase for mixed career pensions since June 2015. Since the aforementioned date his career as an employee has entitled him to the pension  amount reserved for employees. In addition, he has benefited from the 2% revaluation allocated to minimum pensions since September 2015. From now on he will receive a gross pension amounting to EUR   15,654.40 per year.

Tax-shift

For  Thomas nothing changes. He did not pay any taxes since he benefited from the marriage quotient and he will not have to pay any taxes as a result of the abolition of the 30% tax bracket.

è Total net gain = EUR 1,370.58

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4) Since 1st November 2007  Valérie has received a gross taxable pension for singles which on 1st January 2015 amounted to  EUR 19,200 per year. 

Welfare adjustment

In May 2015 her holiday allowance was raised and it rose from EUR 668.64 to EUR 708.04, being a gross  increase by EUR  39.40. The total gross pension per year (including the holiday allowanced) rose from EUR 19,868.64 to EUR 19,908.04.  Her net pension per year has risen from EUR 17,393.30 to EUR 17,416.94.

Tax-shift

The abolition of the 30% tax bracket will result in Valérie being able to benefit from a EUR 184 tax rebate 

Total net gain = EUR 207,64

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