Transfering annuity insurance to savings account.
What should you pay attention to when converting annuity into bank savings?
Tax-friendly saving for a supplementary pension can be done in various ways. For example, you can take out an annuity insurance policy or open a bank savings account. But what if it now appears that transferring the annuity opened in the past to bank savings is financially more beneficial? Can you just convert your annuity insurance policy and if so, when is it wise?
Transferring annuity to bank savings, when is it wise?
The amounts that you invest in annuity insurance over the years are fixed. This means that you cannot simply record this. If you still want this, the bank or insurer will charge high costs for this. Due to these high costs, it is not attractive to convert your annuity to bank savings before the end of the term.
Will your annuity insurance soon reach the end date? Then you have the choice to continue saving for a supplementary pension, or to have the amounts accrued paid out in installments. In both cases you can choose to convert the annuity into bank savings. This is interesting, for example, when a bank savings account entails a higher return and lower costs.
Converting annuity insurance into bank savings, how do you do that?
Whether you choose to save further or to have the accumulated credit paid out in installments, converting an annuity into bank savings works the same way. The first thing you do is open a bank savings account. Of course it is important that you make a good comparison in advance. Which bank savings account offers a high interest rate and has favorable conditions? Once you have opened a suitable account, request your current insurer to transfer the accumulated annuity credit to your newly opened bank savings account. This is called capital transfer.
Note: Ensure that this capital transfer actually takes place. Do you not do this, but do you first allow the accumulated credit to be paid into your own account and then transfer it to a bank savings account yourself? In that case, the Tax Authorities consider this to be the surrender of your annuity, as a result of which you pay revision interest and income tax.
If you have submitted the request for a capital transfer, the bank and insurer will exchange the necessary information among themselves. They then complete the transfer, after which your annuity credit will be in the new bank savings account within a few days.
Note: Opening a new bank savings account entails the necessary costs. For example, you pay advice, closing and in some cases mediation costs. Set these costs in advance against the proceeds of the transfer and ask yourself whether switching is financially beneficial or not.
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