Individual Pension Plans
Planes de pensiones del sistema individual
Coverage
Voluntary participation
- Any person who expresses the will to join the plan and has the legal capacity to do so.
- The promoters must be financial institutions: banks, insurance companies, pension fund management companies.
Financing
General finances
- Fully funded pension plans implemented through financial and actuarial capitalisation systems.
Contribution payments
- Persons provide contributions themselves and decide on the amount individually.
- The payment of contributions is flexible, and may be periodic (monthly, quarterly, annual, etc.).
State support & incentivising strategies
- The contributions paid to the pension plans generate a right to apply for a series of reductions in the personal income tax subject to certain limits: annual contributions up to a maximum of EUR 8,000 or 30% of the sum of net income from work and economic activities for the year are deductible.
- The maximum tax-deductible limit applies to the total contribution from pension plans.
Administration
- Fund management entities must accomplish certain minimum capital requirements and must be authorised by the Ministry of Economy.
Qualifying Conditions
- The retirement age required by the corresponding social security scheme will apply (general scheme or a special scheme), whether it is the age for ordinary, early or deferred retirement.
- When a participant's access to retirement in the corresponding social security scheme is not possible, the contingency will be understood to have occurred at 65 if the participant does not work and is not paying contributions for the contingency of retirement into any social security scheme.
- Pension plans may provide for the payment of the retirement benefit in the event that the participant, whatever their age, terminates their employment relationship and becomes legally unemployed.
Benefits
Pension payments
- Benefits depend on the term of pension payment (lump sum payment, fixed-term or lifelong pension), the biometrical tables, and the technical interest rate.
- Pension plans are defined benefit.
Taxation and social security contributions
- Pensions are subject to tax.
- The same tax regulations governing occupational pension plans apply to individual pension plans.
- Pension payments are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary participation
- Any person who expresses the will to join the plan and has the legal capacity to do so.
- The promoters must be financial institutions: banks, insurance companies, pension fund management companies.
General finances
- Fully funded pension plans implemented through financial and actuarial capitalisation systems.
Contribution payments
- Persons provide contributions themselves and decide on the amount individually.
- The payment of contributions is flexible, and may be periodic (monthly, quarterly, annual, etc.).
State support & incentivising strategies
- The contributions paid to the pension plans generate a right to apply for a series of reductions in the personal income tax subject to certain limits: annual contributions up to a maximum of EUR 8,000 or 30% of the sum of net income from work and economic activities for the year are deductible.
- The maximum tax-deductible limit applies to the total contribution from pension plans.
- Fund management entities must accomplish certain minimum capital requirements and must be authorised by the Ministry of Economy.
- The retirement age required by the corresponding social security scheme will apply (general scheme or a special scheme), whether it is the age for ordinary, early or deferred retirement.
- When a participant's access to retirement in the corresponding social security scheme is not possible, the contingency will be understood to have occurred at 65 if the participant does not work and is not paying contributions for the contingency of retirement into any social security scheme.
- Pension plans may provide for the payment of the retirement benefit in the event that the participant, whatever their age, terminates their employment relationship and becomes legally unemployed.
Pension payments
- Benefits depend on the term of pension payment (lump sum payment, fixed-term or lifelong pension), the biometrical tables, and the technical interest rate.
- Pension plans are defined benefit.
Taxation and social security contributions
- Pensions are subject to tax.
- The same tax regulations governing occupational pension plans apply to individual pension plans.
- Pension payments are not subject to social security contributions.
Legal Basis: Royal Legislative Decree 1/2002 of 29 November approving the consolidated text of the Pension Plans and Funds Regulation Act (Real Decreto Legislativo 1/2002, de 29 de noviembre, por el que se aprueba el texto refundido de la Ley de Regulación de los Planes y Fondos de Pensiones).
Associated Pension Plans
Planes de pensiones del sistema asociado
Coverage
Voluntary participation
- The promoters are any association or trade union. Participants are their members.
- Discrimination in coverage is prohibited. All members of associations/trade unions can access the plan on equal terms and rights.
Financing
General finances
- Fully funded pension plans implemented through financial and actuarial capitalisation systems.
Contribution payments
- Contributions are provided by each participant.
- Promoters do not pay any contribution.
State support & incentivising strategies
- The contributions paid to the pension plans generate a right to apply for a series of reductions in the personal income tax subject to certain limits: annual contributions up to a maximum of EUR 8,000 or 30% of the sum of net income from work and economic activities for the year are deductible.
- The maximum tax-deductible limit applies to the total contribution from pension plans.
Administration
- Fund management entities must accomplish certain minimum capital requirements and must be authorised by the Ministry of Economy.
Qualifying Conditions
- The retirement age required by the corresponding social security scheme will apply (general scheme or a special scheme), whether it is the age for ordinary, early or deferred retirement.
- When a participant’s access to retirement in the corresponding social security scheme is not possible, the contingency will be understood to have occurred at 65 if the participant does not work and is not paying contributions for the contingency of retirement into any social security scheme.
- Pension plans may provide for the payment of the retirement benefit in the event that the participant, whatever their age, terminates their employment relationship and becomes legally unemployed.
Benefits
Pension payments
- Benefits depend on the term of pension payment (lump sum payment, fixed-term or lifelong pension), the biometrical tables, and the technical interest rate.
- Pension plans are defined benefit.
Taxation and social security contributions
- Pensions are subject to tax.
- The same tax regulations governing occupational pension plans and individual pension plans apply to associated pension plans.
- Pension payments are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Voluntary participation
- The promoters are any association or trade union. Participants are their members.
- Discrimination in coverage is prohibited. All members of associations/trade unions can access the plan on equal terms and rights.
General finances
- Fully funded pension plans implemented through financial and actuarial capitalisation systems.
Contribution payments
- Contributions are provided by each participant.
- Promoters do not pay any contribution.
State support & incentivising strategies
- The contributions paid to the pension plans generate a right to apply for a series of reductions in the personal income tax subject to certain limits: annual contributions up to a maximum of EUR 8,000 or 30% of the sum of net income from work and economic activities for the year are deductible.
- The maximum tax-deductible limit applies to the total contribution from pension plans.
- Fund management entities must accomplish certain minimum capital requirements and must be authorised by the Ministry of Economy.
- The retirement age required by the corresponding social security scheme will apply (general scheme or a special scheme), whether it is the age for ordinary, early or deferred retirement.
- When a participant’s access to retirement in the corresponding social security scheme is not possible, the contingency will be understood to have occurred at 65 if the participant does not work and is not paying contributions for the contingency of retirement into any social security scheme.
- Pension plans may provide for the payment of the retirement benefit in the event that the participant, whatever their age, terminates their employment relationship and becomes legally unemployed.
Pension payments
- Benefits depend on the term of pension payment (lump sum payment, fixed-term or lifelong pension), the biometrical tables, and the technical interest rate.
- Pension plans are defined benefit.
Taxation and social security contributions
- Pensions are subject to tax.
- The same tax regulations governing occupational pension plans and individual pension plans apply to associated pension plans.
- Pension payments are not subject to social security contributions.
Legal Basis: Royal Legislative Decree 1/2002 of 29 November approving the consolidated text of the Pension Plans and Funds Regulation Act (Real Decreto Legislativo 1/2002, de 29 de noviembre, por el que se aprueba el texto refundido de la Ley de Regulación de los Planes y Fondos de Pensiones).