When you start your birthday and approach retirement age, you start to think about your future. Many doubt that retirement pensions can be sustained in the long term, hence they see other options such as Pension plan. How does it work? Is it a good thing to have? What advantages and disadvantages does it give?
If you have also raised these questions, or some others, then we want to talk to you and tell you about pension plans, how they work and if it is a good investment or there are aspects that can make you opt for something else.
What is a pension plan?
The first thing you need to do is understand well what a pension plan refers to. This is actually a savings that always occur in the long term. It really is a savings plan that helps you save a portion of your money for when you retire.
For example, imagine that you have a salary of 2000 euros. The pension plan would be in charge of saving, of those 2000 euros, x money, let's put 200 euros each month. Thus, at the time of retirement, you would not only have your pension, but also that saving that you have been making during your working life with the aim of complementing your retirement.
This practice is quite useful, especially since often the pension that many have left is not enough to live on. In addition, having a retirement and also a pension plan is not incompatible, that is, you can rest easy because they will not make you decide on one or the other.
Pension plan: how does it work in Spain?
In Spain you must bear in mind that the retirement age is increasing until, in 2027, it is set at 67 years. As long as you have 36 years of Social Security contributions, you can retire at 65, but sometimes it is better to hold out a little so that the pension is somewhat higher.
Of course, later there are specific cases, such as people with disabilities, with risk rates in their work, etc.
The operation of the pension plan is simple. It is based on contracting this service, normally offered by banks and, contribute, each month, an amount of money. Normally, there is an annual maximum of 2000 euros.
This money goes to a pension fund and instead of standing still, it is used to invest by buying and selling assets so that there is a long-term profit.
The Pension plans are regulated by Royal Legislative Decree 1/2002 and also by the Pension Plans Law and RD 304/2004 where the Regulation of Pension Plans is established.
This means that, when rescuing the pension plan, not only the money that has been deposited is obtained, but also the profitability that that money has generated. That is, you are going to get more than what you have contributed.
What is that money invested in? Well, the most common is in fixed income, variable income, mixed or guaranteed plans. The managers of the plan take care of this and you should not worry about it.
Despite the fact that this figure is well known, few decide to set aside a part of their salary for the pension plan. However, the sooner you start, the better, because being something long-term, the more you spend, the more profitability can be on that money that has been set aside.
Advantages and risks of this product
Now that you've seen the pension plan and how it works, it's time to weigh up the pros and cons of this product. And is that before deciding to do it, you have to know if it suits you or not.
Among the latests Moravia's compositions advantages that a pension plan gives you are:
- Deduct on the rent. This is because, by separating a part of your annual salary, when making the income statement, the "real" income is not obtained, but the money that you are putting into your pension plan is subtracted. Implying? Well, you pay less taxes.
- You can leave the plan to whoever you want. Normally this is to the heirs, as long as you die before your time, or to the person you consider.
- You can change the pension plan. In other words, you can customize it according to your situation and / or needs. And without paying anything.
As for the disadvantages, these go to depend on the risk profile assumed, since you can be conservative, moderate or risky.
- If you are conservative, the benefit you get is less, but in return you make sure not to lose that money that you are putting.
- In case of being moderate, there are certain risks that can cause you to lose some of the money contributed.
- If you are risky, the risks are much higher, and you may be "lucky" or end up betting badly and losing a lot from the pension plan.
- Another problem with the pension plan is that, when you get that money back, you will have to pay taxes on it. The more money you have, the more you will pay later.
Can the plan be rescued in a situation other than retirement?
Although it is normally understood that the pension plan can only be recovered when a person retires, it is not the only way to do it. exist other situations that can enable you to rescue your pension plan and recover that money that you have had moving.
For example:
- If it has been 10 years since you hired him. Now, this has some nuances that you have to review with your manager, for example, if you contrast your pension plan in 2015, until 2025 you could not rescue it.
- If you are long-term unemployed. To be long-term unemployed, you have to be looking for work for at least 360 days.
- If you have suffered a disability or a serious illness. An accident, an illness that has left you incapacitated, etc.
- If you die. In this case, the heirs themselves will be able to redeem the pension plan, paying income tax, of course. The good thing is that pension plans do not pay inheritance tax.
- Now that you know what a pension plan is, how it works and the good and bad it has, would you dare to hire one? Let us know if you see it as something viable or it should be modernized.