Individual pension commitment - EIP

An individual pension commitment (EIP) is a life insurance policy that provides supplementary pension capital for company directors through their companies. By taking out EIP insurance, you are the owner of the policy and benefit from very advantageous tax treatment. Your company pays the premiums, which are fully deductible provided that the 80% rule is respected. This life insurance policy can benefit company directors or employees. In addition, it is possible to combine an EIP with group insurance and a supplementary pension plan for the self-employed (PLCI).

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If you are a company director and want to build up your supplementary pension, an individual pension commitment is a very good choice. Your company can take out an EIP insurance policy on your behalf if you receive a regular monthly salary. What's more, you can combine your EIP with a PLCI pension plan. This gives you a number of tax advantages:

1. Invest in real estate projects
2. The premiums paid by your company are 100% deductible as business expenses.
3. Benefit from additional protections to reduce your overall tax burden and meet your specific needs.

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Following the law of December 18, 2015, workers are required to liquidate their supplementary pension capital when they take early retirement.

If you remain active until the age at which you meet the conditions for a full career (currently 65, 66 from 2025 onwards), your supplementary pension capital (EIP) will be taxed at the preferential tax rate of 10%, even if you liquidate it before your 65th birthday. The points to note are therefore:

1. You must prove that you have worked for a full 45 years ( mypension )
2. You must remain active during the last 3 years preceding the 45-year professional career period.
3. The reduced tax rate of 10% does not apply in the case of early retirement.

   
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Firstly, the PLCI is the independent third pillar pension contract that offers the best tax leverage. It is therefore generally the preferred contract when setting up second pillar insurance. The PLCI is often supplemented by an EIP or a CPTI.

1. The PLCI contract is more advantageous because it is not subject to the 4.40% tax (this provides tax deductibility at marginal tax rates and a reduction in social security contributions for the self-employed).
2. Capital gains tax is spread over 10 years.
3. The choice between an EIP and a CPTI depends on your self-employed status (company director or self-employed individual).

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An individual pension commitment is a particularly attractive life insurance policy. The taxation of an EIP insurance policy depends on your age at retirement, and your tax benefits as a company director are as follows:

1. The premiums paid by your company are fully deductible provided that they comply with the 80% rule. This rule defines the maximum premium that your company can deduct (it cannot exceed 80% of the amount of your statutory and extra-statutory pension).
2. The amounts paid into your EIP are more tax-efficient than a salary increase. This is because your salary increase will be subject to personal income tax, whereas payments into your EIP pension plan generate greater returns.
3. You can use your independent EIP insurance to finance a real estate investment. In addition, you can optimize your EIP each year based on your income.

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