The hour of great deeds seems to have sounded. The regions’ joint efforts to encourage owners to make their properties more energy efficient are bearing fruit. While drastic rules have been passed to limit or even ban the indexation of rents for energy filters, some owners are considering undertaking renovation work.
But with inflationary pressures, the material crisis and energy prices, the costs of this work are rising.
In some cases, the accumulated reserves can be used to finance energy renovations.
What if you don’t have the necessary funds? To finance a real estate project, the first reflex of an owner is to choose a consumer loan or a mortgage loan from a financial institution. This is less common, but it is also possible utilize the reserves in your supplementary pension scheme.
Group insurance is a very common extra-legal benefit offered by employers. This insurance contract allows for the payment of capital (or an annuity) when you retire or after your death. But in some cases, the reserves you have built up can be used for finance energy renovations.
Ask for an advance
It is possible to deduct part of the amount from your group insurance. This advance can be requested from the insurance company via your employer, or directly from the insurance company if you no longer work for the employer who took out the insurance.
A change to the contract will then be signed directly between you and the insurance company. This document will determine the amount advanced, the repayment mechanism and determination of interest rates, as well as the conditions for repayment of this advance.
The provision of this advance is nevertheless conditional on certain conditions:
- In the insurance policy, the employer must have given the option to withdraw part of the reserve in advance. This is the case for most contracts, but there are still exceptions.
- Payment of this advance is only possible if the acquisition, building,improve, repair or convert real estate located in the European Economic Area (EEA), generate taxable income.
- Receiving this advance is only possible for goods of which you are the full owner, which will therefore only be so not possible for freehold.
What amount are you entitled to?
You can find out the amount of your pension by going to mypension.be. All data relating to your supplementary pension is entered. It should be noted that insurance companies can set minimum requirements for the advances provided.
The granting of an advance will also be accompanied by fees, the terms of which vary from company to company.
In the house of Axfor example, this must amount to a minimum of 2,500 euros, while at Vivium it must be raised to a minimum of 5,000 euros.
It will not be possible for you to withdraw your entire reserve. For example at vivium“the insured can request an advance amounting to between 60 and 70% of his reserves”, explains Dirk Wauters, Head of Communications.
Fees and interest
The granting of an advance will also be accompanied by fees, the terms of which vary from company to company. For example, at Vivium, an amount of 150 euros will be withheld for opening the file. The company will also make a monthly statement with mandatory direct debit for the interest owed on the advance. “Which is 1% more than the guaranteed interest on the pension reserves; it cannot be less than 2%”, explains Dirk Wauters. The Axa insurance company will ask you for 125 euros for costs and administrative costs.
Also note that you can either pay interest every year, or pay interest on a capitalized basis, that is, at the end of the day when the advance is repaid. “However, it may make sense to pay the interest every year, because you can eventually deduct it,” explains Quentin Vandenhaute (Maxel).
Example:
Mrs Dupont has insurance with Vivium.
She would like to take an advance of 20,000 euros from her group insurance. It must have at least 33,333 euros in reserves available on its group insurance.
She pays monthly interest on this advance. The interest amount will amount to 33.63 euros per month if it benefits from a rate of 2% per annum. The reserve attached to the advance will still benefit from the interest rate provided for the group insurance.
What about the end of the contract?
What about the taxation of your group insurance? If you have raised an advance in advance, you will be taxed in the form of a fictitious annuity when the contract has expired. Note that in some cases it is more interesting to repay the advance before the term in order to be subject to normal taxation.
In addition, if you remain active until your 65th birthday or if you can prove a career of 45 years, the notional annuity system will only be applied to 80% of the advance amount, giving a tax advantage. This benefit will be limited to a maximum amount of 85,430.00 euros in 2022. If the advance amount is greater than this ceiling, the balance will be subject to normal taxation (see table below).
What if you are self-employed?
You can also assign your group insurance to finance the (purchase or) renovation of a property. Although the contract formulas are different, the terms and conditions for obtaining advance payment will be the same.
“It is not uncommon to see returns of 7% in these contracts. It would be a shame to withdraw money from a guaranteed investment of 7%. In this case it would be smarter to borrow.”
Is this the best option?
Depending on the situation, early withdrawal from group insurance is not the most advantageous solution: “If you turn 40 and pay interest on this advance for 27 years, it still costs a little money. Sometimes it is more advantageous to take this advance as working capital and to reintroduce it afterwards”, explains Quentin Vandenhaute.
It is better to avoid taking advances on “old” pension schemes that give very good returns. “It is not uncommon to see returns of 7% in these contracts. It would be a shame to withdraw money from a guaranteed investment of 7%. In this case it would be smarter to borrow.”
Pledge, recapitalization, etc.
Group insurance also gives you other options. Lift your group insurance agreement allows you to negotiate a loan by offering additional guarantees. The creditor organization benefits from your group insurance agreement when you pledge it. You can also use the expected capital in your pension scheme to get a time-limited loan (shot credit, where you only repay interest monthly and the capital at the end of the loan). The insurance company that grants you a standing loan will then mortgage your property (or someone else’s), because it is not certain that you actually make up the projected capital. At the end, the capital built up will be used to pay off the payday loan.
