Old age is right around that corner, when we start to worry more about the weather than about trendy bars. For example. It has its good points, eye, it is not all aches and wrinkles. If each person’s dose of experience has been well digested, worries are relativized and little things shine more intensely.
But for that we need tranquility. Although the key there is peace of mind, as old Aristotle said (probably wiser for old than for Aristotle), to seek it the human being first needs to cover a minimum of material needs. I mean, money. And with the strength exhausted by the years, the tap will stop flowing. The trick is to prepare now.
Josà © González, Director of Pensions and Collective Benefits at Santander Asset Management Espaà ± a, describes two tricks to provide that future peace of mind: pension plans and retirement plans they are “two vehicles of a different nature with the same purpose: to generate savings to supplement the public pension at the time of retirement”. In both cases, the sooner and better they are activated, the greater efficiency and less pain: “Doing it as soon as possible implies less financial effort, and it is convenient to face it with periodic and long-term contributions to avoid the fluctuations of the market”. In addition, it is decisive “to adapt the amount to the real possibilities of each investor”.
As things stand, González believes that “we should think more about investing than saving, because current interest rates do not offer returns.” The pension plan follows this strategy: “Participants contribute annually, monthly or as often as they want (they can even interrupt the contribution) money that goes to a fund, whose managers invest in different assets. So the money grows until it ends as a supplement to the public pension when the time comes “.
But the pension plan lives not only on profitability. “They also affect aspects such as taxation, since the contributions have a direct deduction in the personal income tax quota, and the flexibility that the contributions are voluntary, so the effort can be adjusted at the time of the client’s life cycle “. To get the best out of these benefits, “it is very important seek professional advice through a financial institution, which offers the client what best suits their risk profile and time horizon. “For their part, retirement plans are usually aimed at” clients who wish to obtain a return known in advance in exchange for a single premium or several periodicals. “Its main charm consists in” offering a minimum return which, in the current rate environment, is meager and much lower than that of pension plans. “In addition, their contributions, premiums, are mandatory and They do not have tax incentives while they are being contributed, but only at the moment of withdrawing all the money.
Both vehicles, yes, have liquidity. “In the case of pension plans, it can be obtained 10 years after the first contribution or if certain contingencies are met: retirement, death, serious illness, prolonged unemployment or incapacity for work”. In retirement plans, on the other hand, money can be withdrawn “according to agreed conditions, but a penalty may apply”.
One or the other tool is chosen, the important thing is to cheer up. According to Inverco data, barely 40% of Spanish households save through a pension plan. “The deeply rooted sense of ownership has led to an excess concentration of savings in brick,” explains González. But our regulation does not encourage either: “In our country, the replacement rate [el porcentaje del último salario que cubre cada pensión] it stands at around 83%, while the OECD average is 58% “.
To change this dynamic, González suggests “greater financial education that explains long-term savings as a necessity; for example, seeing savings for retirement as just another bill, as a periodic expense.” Without forgetting, yes, “tools and tax incentives that enhance and make possible the universalization of said savings.”
The first teacher to sign up was the covid pandemic, which has demonstrated the effectiveness of this type of savings “In the opening of liquidity windows. Those who have been unemployed with the ERTEs or the entrepreneurs and freelancers who have seen their income dramatically reduced have been able to pull part of the money from their pension plans. More than 50,000 families have benefited “.
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