Bankinter has announced the launch of a new offer of pension plans based on exchange-traded funds (Exchange Traded Funds or ETF's, by its name in English) through Popcoin, your digital investment manager. In this way, the bank becomes the first Spanish entity to include this type of service through aroboadvisor. As with the investment funds of Popcoin, the pension plans of this manager may be contracted by investors who are not clients of the bank and also investing an amount Starting from 1.000 euros.
These pension plans reinforce the current Popcoin offering, which was already the most complete and diversified in the robadvisors market. But, in addition, they expand the current range of Bankinter services, which now has pension plans based on ETF's, which it will also offer to its clients through its digital manager. It is an innovative model as it is linked to a product as specific as exchange-traded funds.
One of the characteristics of this class of products is through a double track. On the one hand, it will offer for the first time pension plans that invest in exchange-traded funds (ETF's) through its automated manager. While on the other hand, Popcoin will reward pension plan transfers with an additional 2,5% of more than 5.000 euros until next July 31. Being one of the alternatives to create a more or less stable savings exchange for the medium and long term. From a significantly different investment perspective compared to other more conventional models.
More flexible pension plans
Investors will have at their disposal three pension plans for three risk profiles, with less or greater exposure to equities, and all of them global in scope, that is, they can invest in assets from all over the world. They are the following plans:
- Global popcoin conservative: with exposure of up to 25% in global equities (stock).
- Global popcoin moderate: with a global equity weight of between 30% and a maximum of 50%.
- Global popcoin dynamic: with investments in global equity securities with a minimum of 30% and up to a maximum of 75% of the total.
Another of its contributions is that it will provide its holders with an additional 2,5% bonus on transfers of pension plans over 5.000 euros, with the condition that the investment has a period of permanence of at least five years.
With profitability of up to 3%
On the other hand, in the long term, the Individual System Pension Plans register an average annual profitability (net of expenses and commissions) of 3,48% and, in the medium term (5 and 10 years), present a profitability of 1,34% and 3,11%, respectively, as shown by the Association of Collective Investment Institutions and Pension Funds (Inverco).
Where the estimated volume of contributions and benefits in recent months would be: gross contributions of 204,4 million euros and gross benefits of 203,0 million euros, with which the volume of net contributions for the month would reach 1,4 millions of euros. In preparing these statistics, a sample of 1.077 Individual System Pension Plans is included, which represents around 99% of its assets, that is, 74.726 million euros and 7,50 million shareholder accounts.
Why a pension plan?
One of the reasons for formalizing any of these financial products is due to the fact of improving purchasing power at the time of retirement. At a time when the average pension in Spain this year it has increased by 5,7%. To the point of reaching average levels of around 985 euros, according to data provided by the Ministry of Labor. As a consequence of these levels in public pensions, pension plans become a tool to improve these salaries.
However, for this measure to be more practical, it is recommended that the contracting of this financial product is not formalized a few years before the arrival of retirement. If not, on the contrary, it is recommended to plan this operation several years in advance. Through monetary contributions every year and based on the real income of its holders. So that they can add income from the age of 67, which is the retirement age from the year 2027. Through different formats that can come from fixed income, variable income or even from alternative investment models.
Does it guarantee a minimum profitability?
One of the aspects that a good part of the small and medium investors consider is whether the pension plans guarantee minimum profitability. Well, the answer is no, since it will depend on the evolution of the financial markets, both in equities and fixed income. Where the risks are significantly higher in the first one. Although in any case, it will depend on the economic context and the financial markets themselves. And that in recent years has generated a slowdown in them, with a special fear of what may happen on the international stock markets.
There is only one way to remedy this incipient problem and that is the formalization of a pension plan that offers a guaranteed return. Although with very small intermediation margins, between 1% and 2,30% every year and whatever happens in the financial markets. While on the other hand, the falls in this class of product have had an impact on their headlines having been become more conservative at the time of choosing this financial product.
Other pension options
One solution that Spanish pensioners can opt for is through a product as popular among investors as mutual funds. But with the great disadvantage that it is another financial product that does not guarantee any kind of returns per year. If not, on the contrary, it will also depend on what the evolution of the different financial markets. But from where you can create a stable savings bag for the medium and long term. Depending on the profile that the user presents in this class of financial products.
While on the other hand, this choice allows its holders to start designing their retirement savings at any time. There are no limits in this aspect and they also allow you to allocate the monetary contributions that you yourself want. Either under very small amounts or with certainly demanding contributions to better reach the golden years in your life. Where you can choose between investment funds based on variable, fixed, mixed income or even from alternative formats so that you can improve the intermediation margins from these precise moments.
Fund profitability
Regarding this aspect, it can be said that the interest offered to its holders has decreased in recent months. In this sense, and due to the trade tensions, volatility and risk aversion have been present in financial markets during the month of May. Thus, the main stock market indices will close the period with losses compared to the end of April, although they continue to accumulate positive returns so far in 2019.
On the other hand, the high uncertainty of the equity markets has caused a strong increase in the demand for public debt, with the consequent revaluation of sovereign bonds. The IRR of the German 10-year bond fell to -0,20% from 0,03% in April and the yield of the Spanish 10-year bond fell to the historical low of 0,73% (1,01% in the close of the previous month). Where the risk premium in Spain has fallen to 92 basis points.
Divergences between the variable and the fixed
With important differences between one or another investment model. Since despite the negative profitability of the month of May, Equity categories are the ones that accumulate the highest returns in 2019. Thus, for example, US equities and emerging equities accumulate returns of 9,6% and 8,5% so far this year, respectively. Thus, the investment funds with the highest net subscriptions were fixed income (especially short-term fixed income) and monetary funds with 879 and 166 million euros, respectively. In addition, they are the categories that accumulate the highest net inflows in 2019 with 2.182 and 1.519 million euros, respectively.
In a trend that can continue in the coming months or even be accentuated with falls with greater intensity and that can harm the interests of small and medium investors. Although it will depend on what may happen to interest rates, both on one side of the Atlantic and on the other, on the other hand, the high uncertainty of the equity markets has caused a strong increase in the demand for public debt, with the consequent revaluation of sovereign bonds. The IRR of the German 10-year bond fell to -0,20% from 0,03% in April and the yield of the Spanish 10-year bond fell to the historical low of 0,73% (1,01% in the close of the previous month).