What are the advantages of pension plans?
Pension plans have always been very popular investment products in Spain.
Guaranteeing a financially comfortable retirement is something everyone aspires to when they think about their future. Pension plans are a very attractive option in this respect because they allow you to save in the long term without knowing too much about finance.
But as well as being suited to people looking for an investment in the future, pension plans offer numerous other advantages.
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Tax relief is one of the main advantages of pension plans because it allows you to save money on taxes in the short term.
You can deduct all the contributions you make to your pension during the year, therefore reducing the tax base of your total taxable income.
The maximum annual contribution to a pension plan is 8,000 euros, of which the Treasury can return as much as 3,600 euros. It all depends on the contribution and the tax rate. Naturally, the lower the contribution or the tax rate, the lower the tax relief.
If your annual contribution exceeds the limit and you can't deduct the total amount, you can accumulate the surplus and claim tax relief over the next five years. And if your spouse's economic activity brings in less than 8,000 euros per year, you can also make contributions in their favour and deduct them on their tax return.
Another way to get even more out of this tax incentive is to use the money you save in taxes to reinvest it in the pension plan itself or in another product, such as an investment fund.
Use our pension plan calculator to find the best plan for you and the return you are looking for. That way, you'll be able to plan your investment and work out the contributions you need to make to maximise the tax advantage and generate a healthy supplement to your future pension.
Flexible contribution system
The way in which contributions are made to a pension plan is also very advantageous because of the flexibility afforded by this type of investment product.
For example, you are not obliged to make regular contributions but are free to pay into your plan as and when you want to meet your goals. You can therefore choose sporadic contributions or set up regular ones every month or quarter or even every six months.
Pension plans are designed to generate an investment in the long term. However, it is possible to release them before retirement in the following cases: incapacity for work, dependency, unemployment, serious illness, death, foreclosure or 10 years after setting up the plan (as of January 2015).
Surrendering a pension plan allows you to obtain the benefits in advance at crucial moments when you need to recover your investment.
Choose the best plan for your circumstances
There are different types of pension plans, so it's important to study the different options for different types of investors and the expected return.
The risk you are willing to take will determine whether you choose a more conservative pension plan or a riskier one. This, and the time you have left to retirement, are the main criterions to bear in mind when choosing a pension plan.
If retirement is still a long way off, you might want to choose products with a higher risk and return. Conversely, the closer you are to retirement, the more advisable it is to choose a more conservative pension plan so that you guarantee the capital.
As time goes by, it's important to track the performance of your plan and make changes if the markets or your personal needs change. Another advantage of pension plans is that you can switch from one to another if you decide to take a different risk to get a different return.
TheBankinter pension plan catalogue describes the full range of plans for different age groups and investor types.
You can also use our pension plan calculator to find out which plan best suits your needs and offers you the return you are looking for. This tool will help you plan your investment and calculate the contributions you need to make to ensure a healthy supplement to your future pension.