Redemption of pension plans and EPSVs

Do you remember when you started your plan, thinking about the future? Well the future is now.

We'll start by congratulating you, as it has surely been a long road. However, we also want to help you find the best way to rescue your plan, so that it is best suited to your new situation, to your new future.

There are many reasons to cash in a pension plan or EPSV, but the most important is yours

Is it time to forget about working and to start enjoying all your time?

If your retirement has been recognised by the social security or your mutual insurance company, you can now cash in your plan. Also, if you opted for an early retirement.

Have you chosen semi-retirement?

In this case, you can choose between continuing to contribute to your pension plan or EPSV until reaching full retirement, or cashing in your plan: you choose.

Have you turned 65 and not retired yet?

When you can't yet retire, but you have stopped all work or professional activity, as well as your Social Security contributions, you can start drawing from your pension plan after you reach 65 years of age. However, for EPSVs, you have to be of legal retirement age.

If this is your situation, you should know that the regulations include three more contingencies and three other exceptional situations that allow you to cash in your plan without actually being retired. Below are the different situations.

CONTINGENCIES

Rescue due to being unable to work

Due to complete permanent disability for one's usual profession, absolute and permanent disability for all work and situations of great disability.

Rescue for dependency situations

In cases of severe or high dependency.

Rescue due to death

If you die and have not expressly designated any beneficiaries, they will be as follows, in successive order: Spouse (not legally separated), children in equal parts, parents in equal parts and legal heirs. You can cash in the plan or continue your investment.

EXCEPTIONAL LIQUIDITY SITUATIONS

Rescue due to unemployment

If you are unemployed and have exhausted your contributory unemployed benefit, or are not entitled to it, and you are registered as a job seeker. Additionally, if you are unemployed as a result of redundancy (ERE), you can redeem your pension plan even if you are receiving a contributory benefit. This benefit will be considered for all purposes as an early redemption due to your retirement benefit, not your unemployment benefit.

Rescue for serious illness

Due to temporary incapacity, following an illness or injury, stopping you from carrying out your usual occupation or activity for a continuous period of at least 3 months, which requires major surgery or treatment in a hospital.
Due to pain or injury with permanent sequelae that limits or totally prevents you from carrying out your occupation or habitual activity, or which makes you incapable of carrying out any occupation or activity, whether or not you need help for the most essential activities.

Rescue your contributions with liquidity at 10 years

As of 2025, contributions and their returns that are at least 10 years old will be redeemable. In the case of EPSV, you will be able to recover the assets from the tenth year from the date of the first contribution.

There are three ways to cash in your pension plan or EPSV

Neither is better or worse than the other: It all depends on your situation and, of course, your plans for the future.

Cash in as a lump sum

You can receive it as a one-off charge for the total or partial amount you need whenever you decide, once you are retired.

Redeem as income

This is an interesting option if you are looking to add to your public pension. You can design and adjust the frequency that interests you the most: by increasing, decreasing or interrupting it.

Mixed redemption

Neither one nor the other. The mixed option combines one part of the redemption value in the form of a lump sum and the other in the form of income.

Whichever mode you choose to rescue your plan, keep the following important information in mind:

You do not have to cash in your plan. So don't rush out and supplement your public retirement pension if you don't need to. Take your time, and find out about all the options you have and make the necessary calculations. You can keep your investment until you need it, and can even continue making contributions after you retire, continuing to enjoy the same tax benefits with immediate liquidity. Simply bear in mind that the contributions you make, once you have collected the retirement plan, will go towards death or dependency contingencies.
As usual, your public retirement pension is less than what you were receiving just before retiring; taxwise, it is usually beneficial to start payments the year after you retire. That way, your work income will be lower and, consequently, the marginal tax rate applied will also be lower.
If you choose the mixed form, we recommend you take out the lump sum the year after your retire, and wait for the following tax year before receiving your first annuity. Once you have the first part, the lump sum, it is highly unlikely you will need to take out any more income immediately; thus avoiding accumulating income from work in the same tax year.
If you contributed to pension plans before 2007, keep in mind that a 40% reduction in your personal income tax base may be included, provided you take it out as a lump sum in the same year you retire, or in the two subsequent years. In the case of ESPV redemption, if the benefit is made in the form of a lump sum, this is the first one following retirement and more than two years have passed since the first EPSV contribution, it will be included in your tax base at 60%, up to a limit of €300,000, and the excess at 100%.
And remember, All rescue modalities will be considered as work income in your personal income tax return, so we advise you to do a tax simulation before making a decision, so you can choose the most appropriate option.

And of course, don't forget: we are here to help you.