Pension plans are the typical option that springs to mind when thinking about saving for retirement.
These products are very popular with people who want to ensure financial peace of mind in the future without having an extensive knowledge of finance. Those who acquire this type of product have the right to receive the money invested as an income when they reach retirement, or in certain special circumstances. But behind pension plans are pension funds, which is the equity created from the contributions made to one or more pension plans.
The pension fund is what supports the pension plan, and its function is to grow the investment.
Pension funds are controlled by the control committee.
When choosing a pension plan, it's very important to understand the investment profile of each plan so that you can decide whether it suits your needs.
Depending on the type of pension plan, the contributions you make will be invested in one kind of financial asset or another, and this will impact the return you receive.
The most common types of investments are:
- Fixed income
- Mixed plans
- Guaranteed plans
Your investor profile (conservative, moderate or aggressive) will determine your choice of plan. While fixed-income plans have lower risk and therefore a lower return, it's the opposite case with unit-linked plans.
But to choose the risk level you also need to understand the investment criteria of each pension plan. This tells you where the investment is placed.
As time goes by, it's important to be able to adapt your investment so that you don't end up in a plan with a higher risk than you are willing to assume, or alternatively you don't miss out on opportunities to get a higher return.
At Bankinter we have plans for every type of profile. And if you're not sure which plan is best for you, use our pension plan calculator to find out.