Simplified occupational pension schemes 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 regulations in 2023, there are several changes from which this group can benefit. 

If, when pension plan contributions were limited, you had to make do with 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 schemes (PSEPs).

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 occupational 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 security 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 banking institutions have been investing in these savings products.

The new pension plans and funds are characterised by their:

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

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

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

This has never particularly affected salaried employees, because if an occupational pension plan is already open 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 a similar amount as before, and they were penalised in terms of the possibility of obtaining personal income tax deductions.

Thanks to the work of self-employed workers' associations, 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 the self-employed:

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

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

Who can benefit from the 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 types can benefit from the simplified occupational pension scheme.

This means that beneficiaries can be:

• Self-employed without employees.

• Self-employed persons with dependent employees.

• Self-employed companieswith significant shareholdings of a company, director, owner or working partner.

How to choose my simplified occupational pension scheme

Undoubtedly, the greatest advantage of this plan for the self-employed is the personal income tax 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 any doubts about how to choose the right PPES for you, PIB Group Iberia can guide you. In our opinion, when selecting an appropriate plan, you should look for one that:

1. Tailored to your level of risk. One of the key points is that you can tailor your investments to your level of risk, depending on your circumstances. If you are a conservative person, you should not opt for very high equities. 
2. Offer you reduced commissions and expenses, This will result in a better return for you.
3. Belongs to a a reputable entity of recognised solvency.