What is an advance?
This is the
amount that can be borrowed against your group insurance reserves for the purchase, construction or renovation of real estate. This allows you to dispose of a portion of your complementary retirement savings now while the same (guaranteed) interest and profit sharing continue to apply.
What are the requirements for taking an advance?
Your first have to see whether your pension plan regulations allow you to take an advance. Your best bet is to check with your employer. If you are entitled to take an advance, keep in mind that it can only be used for the purchase, construction, improvement, restoration or renovation of real estate that generates taxable income. The property (for example, your main home or a second home) must be located in the European Economic Area (the EU member states + Norway, Iceland and Liechtenstein). You can also take the advance and use it towards paying off a mortgage loan.
How much will an advance cost me?
You will be charged interest on the total advance amount. The interest is tax deductible. Like a mortgage loan, the interest rate will
depend on the option you’ve selected. Planning to pay interest annually, or would you prefer to make one single interest payment when you collect your complementary pension, or pay off the advance? If you opt for annual interest payments, you can choose a fixed or a variable rate.
three types of advances1 to choose from:
- cash advance with interest payable annually at a fixed interest rate
- cash advance with interest payable annually at a variable interest rate
- cash advance with no annual interest payments ("capitalised")
1only available if this option is expressly stated in the group insurance regulations
|How?||You pocket your cash advance and pay interest annually, in advance. When you collect your complementary retirement benefits, the advance will be deducted from your final lump sum payout.||You pocket your cash advance but pay no annual interest. When you collect your complementary retirement benefits, the interest and the advance will be deducted from your final lump sum payout.|
|For an interest-bearing advances you can choose either a fixed or a variable rate.||For an advance with capitalised interest, the applicable interest rate will be calculated based on the guaranteed return and profit sharing.|
|Tax implications||Annual interest payments are tax deductible.||The interest is tax deductible when you pay off the cash advance or collect your complementary retirement benefits.|
If you go for the "no annual interest" option, the applicable interest rate will be calculated based on the guaranteed return and profit sharing. The total interest due will be withheld from the final group insurance payout.
Do I have to pay back the advance?
You can pay back the advance at any time, partially or in full. Any outstanding balance will be withheld from your final lump sum retirement payout.
Is there an upper or lower limit to the amount I can take as an advance?
The maximum amount you can take will depend on your contract’s term to maturity and the interest payment option you selected.
Note that the minimum amount you have to take as an advance is
Want to find out how much you can take as an advance? Log in to
My Global Benefits to check your personal status.
Interested in applying for an advance? Contact your HR department for more details or
fill out our online contact form.
We have summarised all this information for you in a brochure:
Take an advance on your group insurance