Simplified occupational pension plans for the self-employed: everything you need to know

Did you know that pension plan rules have changed significantly this year, especially for the self-employed? With the entry into force of the new 2023 regulations, there are several changes from which this collective can benefit.

If, when pension plan contributions were limited, you had to settle for a maximum of 1,500 euros, you will certainly be interested to know about the new product that has changed this situation. We are talking about the simplified occupational pension plans (PPES).

At PIB Group Iberia we are aware of all the updates affecting the self-employed and we are experts in insurance for the self-employed.

Here we are going to explain in depth the simplified employment pension plans for the self-employed: from the limits applicable to this new product to which workers can benefit from it.

What are Simplified Employment Plans? Limitations

Simplified employment plans are a new type of pension plan in Spain, designed to provide SMEs and the self-employed with access to a complementary social welfare system. Their aim is to provide them with a retirement savings solution, complementing Social Security benefits.

The first of these plans was launched in 2022 by the National Federation of Self-Employed Workers’ Associations (ATA). Little by little, many insurance companies and banks have been betting on these savings products.

The new pension plans and funds are characterized by their:

• Simplification of the administrative burden of traditional pension plans.
• Increased accessibility for different types of workers.
• Greater flexibility in contributions, both in quantity and frequency.in both quantity and frequency.
• Reduced commissions.

Limitations of the new occupational pension plans for the self-employed

In recent years, pension plans pension plans have been increasingly limiting their contributions. First, they went from 10,000 euros to 8,000 euros, until they gradually reached the current level of 1,500 euros.

This fact has never particularly affected salaried workers, since, if there is already an open occupational pension plan in the company where they work, they have always been able to increase their contributions.

However, in the case of the self-employed, until now there was no formula available to them to be able to contribute an amount similar to those previously used, and they were penalized in terms of the possibility of obtaining personal income tax deductions.

Thanks to the work of associations of self-employed workers, mutual benefit societies and professional associations, it has been possible to promote the regulation for the promotion of simplified occupational pension plans. We now see that self-employed workers:

• They can contribute 1,500 euros to the individual pension plan of their choice.
• They can make contributions of up to an additional 4,250 euros in the PPES.

That is to say, in total the self-employed can contribute 5,750 euros to the new pension plans, a figure that is almost four times higher than the previous one.5,750, a figure that is almost four times higher than the previous one.

Who can benefit from PPES?

As we have already mentioned, the simplified occupational pension plan is a tool to promote savings for retirement, and is mainly aimed at small and medium-sized companies and their employees, but especially at the self-employed.

All self-employed individuals can benefit from the simplified occupational pension plan.

This means that beneficiaries can be:

• Self-employed without employees.

• Self-employed with dependent employees.

• Self-employed corporate entitieswith significant shareholdings in the company, administrator, owner or working partner.

How to choose my simplified occupational pension plan

Undoubtedly, the greatest advantage of this plan for the self-employed is the IRPF deduction on their contributions. And, although it has been a product enthusiastically welcomed by this group, the truth is that many still do not know what factors to consider when opting for one option or another.

If you have doubts about how to choose the most suitable PPES for you, we at PIB Group Iberia can guide you. In our opinion, when selecting an appropriate plan, you should look for one that:

1. Adapted to your risk level. One of the key points is that there is the possibility of adapting investments to your level of risk, depending on the circumstances in which you find yourself. If you are a conservative person, you should not opt for a very high equity.
2. It offers you reduced commissions and expensesas this results in a better profitability for you.
3. Belong to a recognized recognized solvency.