The end of working life in Spain is something that worries many workers because they fear reaching retirement without a good pension or without enough to provide them with the quality of life they deserve. For this reason, investment products that are increasing their volumes are pension plans.
To facilitate your understanding, in this post we will try to shed the aspects considered most important as is its operation, taxation …
In addition, we will finally explain a star alternative, crowdlending , to take advantage of your money from now and be able to benefit from your monthly profits.
Pension plans are financial products intended for savings or private social security instruments aimed at the retirement of workers . The purpose is that the investor makes periodic contributions to dispose, later and in addition to certain pensions, of a capital or an income.
It is the ideal way to save with a view to retirement because of the advantages that investors find there (tax advantages …).
This product is supervised and inspected by the General Directorate of Insurance and Pension Funds that reports to the Ministry of Economy .
Operation of the pension plan
The operation of the pension plan is simple, when an investor decides to contract a pension plan begins with periodic contributions. The contributions are flexible with regard to three factors:
- Amount (within limits)
- Periodicity (monthly, quarterly, semi-annual …)
- Mode (interrupted or uninterrupted)
The flexibility in them makes it easier for individuals to design their “own plan” . These contributions are invested by the plan’s managers based on previously established requirements.
To rescue the money from the pension plan, a series of circumstances must be met:
- Retirement of the plan holder, Social Security.
- Death during the period of realization of contributions as when charged.
- Prolonged detention more than 12 months subject to requirements.
- Total work disability , permanent for all work or usual.
- Great disability
- And other special causes (serious illness, home eviction …)
If any of these situations occur, the owner can decide to redeem the pension plan and with it the way to recover it :
- Income: periodically receives an amount.
- Sole capital: It is charged only once.
- Mixed: Part in the form of income and part in the form of capital.
- At disposal: Receive the funds in the form of income but without a regular periodicity (subject to requirements).
Taxation of pension plans
Taxation is one of the issues that most attracts investors when they decide to hire a pension plan as it is a strong advantage over other savings products.
The taxation of the contributions to the plan reduces the tax payment or the IRPF base and with this the amount to be returned by the Treasury can be increased.
The fiscal outlook was changed in 2015, with the changes taking effect in 2016, incorporating new developments focused mainly on contribution rates. Let’s see below what they are.
Limits of contributions to the pension plan:
The reduction for contributions is limited to deduct the lower of the following amounts: 8,000 euros or 30% of income from work and economic activities regardless of the age of the contractor. In the previous law differentiated age and quantities.
If you obtain income of less than 8,000 euros per year, there is a limit of 2,500 euros for the contribution limit in favor of the spouse.
Rescue of the pension plan
The taxation of the ransom is a process contrary to that of the contributions. Whatever the reason why you are willing to redeem the plan and regardless of the form chosen for it, the benefits are taxed as Earnings from Work .
If in the contributions the tax payment was reduced, at the time of receiving the benefit from the rescue, the general tax base rises as taxes are paid for everything saved and not only for the benefits.
In the taxable base of savings, the sections of the IRPF are:
Depending on the manner chosen to rescue the plan and if contributions have been made before December 31, 2006, the tax rates are reduced, leaving:
- Rescue in the form of income: the tax rates are reduced to be in the range of 20 – 47% in 2015 and 19 – 45% from 2016; depending on the autonomous community, it will be a percentage or another.
- Rescue in the form of capital: Contributions until December 31, 2006, are taxed 60% if they meet pre-established requirements.
The transitional regime by which a reduction of 40% in the rescue is applied in the form of capital contributions prior to 12/31/2006, remains after the reform.
The rest, as of January 1, 2007, do not have any fiscal benefit when it is rescued independently of the form chosen for it.
If you want to know more information, you will find it in the Law of Pension Plans and Funds.
Crowdlending as an alternative to the pension plan
Crowdlending is a financial activity that directly connects investment and financing and that can report those extra or complementary income to your salary, pension in a comfortable way and from now on!
The taxation of crowdlending is simpler than that of a pension plan. The benefits will be taxed as income from movable capital and the retention will be a single percentage.
In addition, the benefits of the investments you make in crowdlending platforms are acquired every month without the need to wait years to rescue the money invested, as is the case with pension plans.
If you want to know more about crowdlending and its investments, download this Crowdlending Investment Guide that will solve any doubt.