Bonus plan: your asset for appraisal
Favourable tax treatment
Bonus plan, a win-win solution for you and your staff
As an employer, you want to reward your staff for a job well done. A year-end or cash bonus is, of course, an option, but you are well aware that your staff members don’t actually pocket much once the taxman has taken his cut. With a bonus plan, the bonus is allocated to a group insurance plan, which entitles both you and your employees to favourable tax treatment.
With a traditional cash bonus, your staff members often end up with just 30% of the gross reward amount in hand. Not only is this unfortunate for your employees, it also dilutes the efforts you put in as an employer. All the more reason for you to consider a bonus plan instead, with tax benefits for both you and your staff.
Tax benefits for your staff
With a bonus plan, a portion of your staff members’ variable pay is allocated to a group insurance plan. As premiums paid into this type of plan are taxed at a much lower rate than traditional cash bonus payments, your staff members will walk away with 73-74% of their bonus in hand, significantly more than with a cash bonus. And when invested in a Branch 21 or Branch 23 fund, the amount could be even higher.
And additional benefits for you as well
This tax-efficient way of rewarding your staff gives you a
competitive edge in the war for talent. At the same time, you, as an employer, also benefit from favourable tax treatment. With a cash bonus, you pay 25% in employer contributions. If you opt for a bonus plan solution instead, the percentage drops to
just 13.3%. On total company-wide bonus payments, this can easily add up to hundreds and thousands of euros per year.
Experience the flexibility of a bonus plan
A custom-designed solution that’s right for your company
A bonus plan is more than just a tax-efficient advantage. It’s an integral part of a flexible remuneration policy that you can tailor to fit your company culture and vision:
A bonus plan can transform an existing bonus system or serve to create a new pay structure
A bonus plan can be set up for specific categories of employees
Payments into a bonus plan can be allocated differently according to age and seniority (e.g. a small share of the premium for younger staff members vs a bigger share for older employees)
With or without a guaranteed return
Premiums paid into a bonus plan are invested for the long-term. Depending on your risk appetite and risk profile, you can select an investment vehicle with or without a guaranteed return:
If you invest the premiums in
Branch 21, you get the security of a
guaranteed return, plus annual (variable) profit sharing may be also be awarded.
If you invest the profit sharing in Branch 23 with no guaranteed return, you can earn excess ROI based on your own self-defined risk appetite. This return will vary based on the economy and financial market performance.
You also have the option to invest 100% of the premiums in Branch 23.
With a bonus plan, your staff members start reaping the benefits immediately
Another option that comes with a bonus plan is that it allows your staff members to take out a cash advance on their supplementary pension benefits. They can apply a portion of their accrued pension reserves towards buying or remodeling real estate or to pay off a mortgage loan, before they reach retirement age.
Your staff members can find all the details about taking an advance on My Global Benefits.
Want to find out more?
AG Employee Benefits has capitalised on the digital revolution to provide additional value to customers. Our unique digital tools for you (AG EB Online) and your staff (My Global Benefits) will simplify your paperwork and shine the spotlight on the efforts you make.
You are, of course, welcome to contact us with any questions or for specific advice. Send us your question(s) about bonus plans or request a non-binding quote, and we’ll get back to you with an answer as soon as possible.
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