With more than 83 years, Spain is the third country in the world with the longest life expectancy. It is only surpassed by Japan and Switzerland. In this context, in addition to the uncertainty of pensions, more and more people are considering supplementary savings for their retirement or for any unforeseen eventuality.
Among the most demanded and popular plans are the Pension plans (specially designed for this purpose) and the Savings plans (which can also be interesting). But which of the two is better?
The best way to find out is to compare the advantages and disadvantages of these two products. As with everything, it will depend on your particular case.
In a first analysis, a savings plan is usually more attractive because of the possibility of having the money much more available and the Pension Plans because of their tax advantages (reduction of the taxable base of the income tax return). But is this the most interesting in your case? We analyze in detail which is better in each case: Pension Plan or Savings Plan?
What to consider in the Savings Plan
They provide much greater liquidity of capital, guarantee a return (for many products) and their costs are usually more moderate. But to what extent are they advantageous to ensure a peaceful retirement? These are the most important points to take into account before taking one out:
Compare all options
Compare well the guaranteed interest offered by the banks. Of course, you don’t have to limit yourself to the options offered by your bank, investigate the proposals of the insurance companies.
And compare not the technical interest, but the net interest, net of expenses.
Possibility to choose the investment
If we have financial knowledge, it is interesting to know that we can decide on the investment. That is to say, instead of opting for guaranteed products, you can opt for one linked to funds.
This requires the dedication of more time, but also has advantages if well managed.
Study other savings plans (SIALP and PIAS)
However, beyond the conventional savings plans or deposits offered by banks, there are other savings and pension products that can be contracted through insurance companies: SIALP and PIAS.
Individual Long-Term Savings Insurance (SIALP) is a service offered in this case by insurance companies.
They are called Savings Plans 5 because if the investment is maintained for 5 years, tax exemption can be obtained for contributions that do not exceed 5,000 euros per year, by redeeming it all at once. It was created in 2015 and has the advantage that insurance companies must guarantee by law 85% of the capital contributed.
If you would like more information about contracting a SIALP plan, PIB Group Iberia will explain all the options.
The second option is the Individual Systematic Savings Plan (PIAS). During the contribution, it has no tax advantages, but it does at the time of the benefit, if you redeem it in the form of an annuity. When it is constituted, you will not have to pay tax on all the benefit generated. In other words, it generates an important tax advantage when it is redeemed (at least 5 years after it is contracted).
What to consider in the Pension Plan
This plan is specifically designed for long-term savings. But what tends to make it often chosen over the conventional savings plan is that they are fiscally incentivized.
In fact, it is the only savings product whose contribution is tax deductible in the Personal Income Tax Base, with a limit of 8,000 euros per year (REVIEW January 2021: the contribution has been limited to 2,000 euros per year in individual pension plans).
In addition to this advantage, they often have a good return, the level of risk can be chosen and the fees tend to be lower and lower.
Because of these benefits, pension plans are usually the first option that comes to mind to complement our public retirement pension. However, PIB Group Iberia always warns that the Pension Plan is not a product for everyone and we offer the possibility of comparing it with the other alternatives mentioned above and other savings products.
Do you want more information about the best option for your specific case? Do not hesitate to contact our team. We will study these possibilities, as well as the products offered by the main companies.
