The hour of great works seems to have sounded. The joint efforts of the Regions to encourage owners to make their properties more energy efficient are bearing fruit. While drastic rules have been adopted to limit or even prohibit the indexation of rents for energy strainers, some owners are considering undertaking renovation work.
But with the inflationary pressure, the crisis of materials, and that of the prices of energy, the cost of this work increases.
In some cases, the reserves built up 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 opt for a consumer loan or a mortgage loan from a financial institution. However, this is less frequent, but it is also possible to tap into the reserves of your supplementary pension plan.
Group insurance is a very common extra-legal benefit offered by employers. This insurance contract provides for the payment of capital (or an annuity) when you retire or following your death. But in some cases, the reserves you have built up can be used to finance energy renovations.
Ask for an advance
It is indeed possible to deduct part of the amount of 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 policy.
An amendment to the contract will then be signed directly between you and the insurance company. This document will determine the amount granted in advance, the repayment mechanism and the setting of interest rates, as well as the terms of repayment of this advance.
The granting of this advance is nevertheless subject to certain conditions:
- The employer must have provided, in the insurance policy, the possibility of withdrawing part of the reserves in advance. This is the case for the majority of contracts, but exceptions remain.
- The payment of this advance is only possible if it is a question of acquiring, building,improve, repair or transform real estate located in the territory of the European Economic Area (EEA), generating taxable income.
- Receiving this advance is only possible for goods for which you are the full owner, which will therefore only be not possible for bare ownership.
What amount are you entitled to?
You can find out the amount of your pension by going to mypension.be. All the data concerning your supplementary pension is entered there. It should be noted that insurance companies may establish minimums on the advances granted.
The granting of an advance will also be accompanied by fees, the terms of which vary from one company to another.
At the house of Axafor example, this must amount to a minimum of 2,500 euros, while at Vivium, the amount withdrawn must be a minimum of 5,000 euros.
It will not be possible for you to withdraw all of your reserve. For example, at vivium“the insured can request an advance which amounts to between 60 and 70% of his reserves”, explains Dirk Wauters, Communications Manager.
Fees and interest
The granting of an advance will also be accompanied by fees, the terms of which vary from one company to another. For example, at Vivium, an amount of 150 euros will be retained for the opening of the file. The company will also carry out a monthly statement with mandatory direct debit for the interest due on the advance. “Which amounts to 1% more than the guaranteed interest applied to 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 charges.
Also note that you can either pay interest each year, or pay interest on a capitalized basis, that is to say at the end of the day, when the advance is repaid. “However, it may make sense to pay the interest every year, because you could eventually deduct it,” explains Quentin Vandenhaute (Maxel).
Mrs. Dupont has an insurance policy with Vivium.
She wants to take an advance of 20,000 euros from her group insurance. It must have at least 33,333 euros of reserves available on its group insurance policy.
She will pay monthly interest on this advance. The amount of interest will amount to 33.63 euros per month if it benefits from a rate of 2% per year. The reserve linked to the advance will still benefit from the interest rate granted to the group insurance.
What about at the end of the contract?
What about the taxation of your term group insurance? If you have withdrawn an advance in advance, you will be subject to taxation in the form of a notional annuity once the contract has expired. Note that in some cases, it is more interesting to repay the advance before the term 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 fictitious annuity system will only be applied to 80% of the amount of the advance, which will generate a tax benefit. This advantage will be limited to a maximum amount of 85,430.00 euros in 2022. If the amount of the advance is greater than this ceiling, the balance will be subject to normal taxation (see table below).
What if you are independent?
You can also assign your group insurance to finance (the purchase or) the renovation of a property. Although the contract formulas are different, the terms and conditions for obtaining an 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 at 7%. In this case, it will be smarter to to borrow.”
Is this the best option?
Depending on the situation, early withdrawal from group insurance is not the most advantageous solution: “If you are 40 years old and you pay interest on this advance for 27 years, it still costs a little money Sometimes, it is then more advantageous to take this advance as working capital and to reinject it afterwards”, explains Quentin Vandenhaute.
It is better to avoid taking an advance on “old” pension plans that offer 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 at 7%. In this case, it will be smarter to to borrow.”
Pledging, recapitalization, etc.
Group insurance also offers you other possibilities. Pledge your group insurance contract allows you to negotiate a loan by offering additional guarantees. The creditor organization becomes the beneficiary of your group insurance contract when you pledge it. You can also use the projected capital of your pension plan to get a fixed term loan (bullet credit, in which you only repay interest monthly, and the capital at the end of the loan). The insurance company that grants you the bullet loan will then mortgage your property (or another) because it is not certain that you will actually constitute the projected capital. At the end, the capital built up will be used to settle the bullet loan.