All articles · 2025-12-30 · Pension
Why do self-employed individuals structurally build up too little pension?
Many self-employed individuals don't realize how big their pension problem actually is. The statutory pension is lower than one might think, and those who start too late with…
By Jan Hermans, CEO & founder of Lyff.
The biggest mistake? Thinking that pension can start later.
Time plays a crucial role due to the effect of compounding: return on return only works if you have enough years for it. The earlier you start, the harder that effect works for you.
But time is not the only element. The amount you set aside counts just as much.
Those who start early can build up a large capital with relatively small monthly amounts. Those who start later must compensate for this lack of time by making significantly higher contributions. With the same monthly amount, you simply build up much less if you start later.
In addition, something else plays a role: time in the market reduces risk. The longer you invest, the more fluctuations average out and the smaller the impact of bad years becomes.
Starting early therefore not only means more potential return but also more flexibility: lower monthly costs, more room to adjust, and less pressure on later decisions.
A strong pension plan revolves around consistency, tax optimization, and a clear target amount. Regular contributions linked to your cash flow yield a much more stable result. This makes pension accrual a crucial building block for financial peace of mind.
Jan Hermans' pension machine: more than a piggy bank
At Lyff., we see the management company (managementvennootschap) as a ticket to a career that evolves with who you are. A crucial part of this is the pension machine. Anyone who reduces the management company to a fiscal trick to only pay less taxes today misses the leverage to financial mastery. The real power lies in the second pillar, and specifically the Individual Pension Commitment (IPT) [Individuele Pensioentoezegging]. This mechanism allows you to have premiums paid by the company, which are then deductible as a business expense. But beware: this is not a standalone file.
The engine of your IPT runs on your remuneration policy. The well-known 80 percent rule states that your total pension may not be higher than 80 percent of your last normal gross annual salary. Anyone who artificially keeps their salary low at the statutory minimum for years unwittingly squeezes their own pension space. In my book, I describe how you can optimize this. An entrepreneur with a salary of 45,000 euros builds up a significantly smaller pension capital than someone who, through smart remuneration techniques, such as monthly warrants, defensibly increases their salary basis to, for example, 80,000 euros. The effect on your final capital can amount to hundreds of thousands of euros difference.
Real estate as a turbo for your pension
Another shortcut that is often overlooked is using your pension plan to finance private real estate. Instead of paying off your family home with net private money (the bath of humiliation where you first pay 50 percent taxes and social contributions), you can work with a bullet loan linked to your IPT. You only pay the interest privately, while your company builds up the capital with gross money through deductible premiums. This provides a huge advantage in your private cash flow and ensures that your assets grow faster.
Do you want to know how these mechanisms work specifically for your company? Check out our page on
Frequently Asked Questions
Can I make a catch-up premium or backservice contribution if I started late?
Yes, you can. With a backservice, you can still utilize the fiscal space from the past (up to 10 years back). This is a powerful way to take a large bite out of your taxable profit in a good year and boost your pension capital. However, your salary must be high enough at that time to justify this extra space within the 80 percent rule.
What is the difference between Branch 21 (Tak 21) and Branch 23 (Tak 23) within my IPT?
Branch 21 (Tak 21) offers capital protection with a guaranteed interest rate, which feels safe but often costs purchasing power due to inflation. Branch 23 (Tak 23) is linked to investment funds without a capital guarantee. At Lyff., we often recommend a return mix. Because your horizon as an entrepreneur is usually long, a Branch 23 (Tak 23) structure can yield much more in the long run, while you can ride out market fluctuations.
For more in-depth strategies and figures on salary mixes, I recommend my