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Redemption of pension plans and EPSVs

Temporary measures for the redemption of consolidated rights in pension plans and EPSVs

On this page we explain the exceptional measures temporarily permitting the redemption of consolidated rights in pension plans and EPSVs as a result of the COVID-19 crisis. In the case of pension plans, the measures are set out in the Royal Decree-Law of 31 March 2020 and implemented in the  Royal Decree-Law of 21 April on pension plans. The measures for EPSVs are set out in the Basque Government Resolution of 25 March 2020.

See Information for pension plans Information for pension plans

Under which circumstances can you apply to redeem vested rights in your pension plan?

The measures set out three circumstances:

  1. Employed workers who have been furloughed (ERTE) as a result of the COVID-19 health crisis.
  2. Business owners who have had to close their establishments to the public as a result of the state of alarm.
  3. Sole traders workers registered with a social security system and who have had to cease trading as a result of the COVID-19 health crisis.

When can you apply for a redemption?

If these are your circumstances and you want to apply for an exceptional redemption, you have six months from 14 March 2020 (the date when the Royal Decree-Law entered into force) to submit your application, even if you have been reinstated at your job or reopened your business.

Is there a maximum redemption amount?

Yes, there is a maximum amount for each circumstance, which is the lower of the two amounts shown:

Employed workers on furlough:

  1. The net earnings lost during the furlough, with a maximum calculation period equal to the duration of the state of emergency plus one additional month.

  2. The result obtained by apportioning the annual IPREM (public income indicator for multiple purposes) for 12 payments valid in 2020, multiplied by 3 in proportion to the duration of the furlough. The maximum calculation period is the duration of the state of alarm plus one month.

 

Business owners

  1. The estimated net income lost for business closure, with a maximum calculation period equal to the duration of the state of alarm plus one month.

  2. The result obtained by apportioning the annual IPREM (public income indicator for multiple purposes) for 12 payments valid in 2020, multiplied by 3 in proportion to the duration of the furlough. The maximum calculation period is the duration of the state of alarm plus one month.

 

Sole traders

  1. The estimated net income lost for business closure, with a maximum calculation period equal to the duration of the state of alarm plus one month.

  2. The result obtained by apportioning the annual IPREM (public income indicator for multiple purposes) for 12 payments valid in 2020, multiplied by 3 in proportion to the time business is closed. The maximum calculation period is the duration of the state of alarm plus one month.

When and how will you receive the amount requested?

Within seven business days of presenting the required documents, you will receive the amount requested as a single payment in the current account linked to your pension plan. The payment will be subject to the applicable taxation on pension plan benefits.

Can unit holders entitled to a 40% tax reduction benefit from it?

Yes, provided the units were purchased before 1 January 2007. If this is your case, when you submit your application, you can choose to use them or reserve them for another occasion.

If several redemptions are requested during this exceptional liquidity situation, the 40% tax reduction will only apply to one payment.

See Information for EPSVs Information for EPSVs

Which EPSV(1) holders can apply for a redemption?

There are two eligible circumstances:

  1. Employed workers who have been furloughed (ERTE) or made redundant (ERE) as a result of the COVID-19 health crisis.

  2. Sole traders who have lost business owing to COVID-19 and are entitled to unemployment benefit.

How and when will you receive the amount requested?

In the case of a furlough, the holder will receive the funds in the form of supplementary income: ie, the benefit will equal the difference between 100% of the regulatory unemployment benefit base and the percentage of the regulatory base the worker receives from the furlough.

In the case of redundancy, the holder will be entitled to the benefit in the same conditions as with the unemployment benefit.

The entitlement to the benefit commences the same day that the worker is either furloughed or made redundant by their company as a result of the COVID-19 emergency. It will last throughout this situation