Retirement is an issue that concerns the vast majority of people, especially when this moment is imminent. For this reason, many opt for a pension plan, since for them it is synonymous with having a guaranteed retirement. Although insurance companies show this financial product as the ideal formula to save in the long term, the truth is that everything that glitters is not gold. Are you considering whether or not pension plan? We will try to clear all doubts so you can make the best decision in your case.
First of all in this article by New Lender let’s see what exactly is a pension plan. It is a financial product to save for retirement. Thus, the interested party will make contributions with certain periodicity with the objective of having an income when it is time to retire. Once deposited, the managing entity will be responsible for carrying out various movements and investments to ensure that the savings grow and can be recovered within the established period.
In this sense, pension plans have some advantages, but also risks, so we are going to make a summary with both so that it is clear if it suits you or not.
Tax savings is probably the biggest advantage of pension plans. In fact, they are the only financial product that have a reduction in the taxable income of the IRPF, that is, that they are tax deductible. The maximum deduction limit is set at 8,000 euros per year.
Although a priori may be an interesting benefit, it is necessary to mention that this incentive during the life of the pension plan has a less friendly face. And is that when you reach retirement, will be declared as income from work, which can happen that the tax is even higher than the deductions themselves.
If you are questioning if a pension plan is appropriate, you should also assess the disadvantages of hiring it:
– Profitability is not guaranteed. One of the biggest attractions of pension plans is that they are subject to profitability. However, this can not be guaranteed. Moreover, like any investment, they may lose value at some point.
– You can lose money. A pension plan works in a similar way to an investment fund. This means that the managing entities will use your money to invest it in different assets to reach a certain profitability. Sometimes they will win and sometimes they will not.
– You can not have your savings when you want. Another disadvantage of hiring this product is its lack of liquidity, which means that you can not enjoy your savings until you reach retirement. There are exceptions that include the recovery of your money: in case of long-term unemployment or disability. Pension plans are designed for the long term, so only in these cases can you access your deposits.
Now that you know the advantages and disadvantages of these products designed for savings, you may still be unconvinced. Fortunately, there are other alternatives to pension plans if what worries you is having money for your retirement. These are some of the most popular options:
1.- Insured Pension Plans (PPA). The purpose of this type of plans is also to save for retirement, but they have the advantage that they are safer. Its characteristics are similar to pension plans in that savings can not be disposed of easily and are also deductible. Of course, PPAs, unlike a conventional retirement plan, guarantee a minimum return and the total capital invested at the beginning. This means that the investor will never lose their savings.
2.- Individual Systematic Savings Plans (PIAS). Many people consider them the best pension plans, especially due to the fact that the money deposited can be recovered or, at least, partially. Of course, the longer you keep the savings without touching, the more incentives. The PIAS also allow for tax benefits.
3.- Online credits in the act. Sometimes, people insist on looking for the best pension plans that ensure a quiet and smooth retirement. If this is your case, it is time for you to consider other options such as online credits offered by companies such as New Lender. The operation is very simple and the best thing of all is that the money is received immediately. Online loans with New Lender are the solution to the problems of liquidity, since you can get up to 750 euros in just a few minutes, without paperwork or extraneous requirements.
So, pension plan yes or no? The answer will depend on your personal situation and needs. Before deciding, you should weigh all the pros and cons of hiring one of these financial products. We have already seen that, although they are fiscally deductible, it can represent bread for today and hunger for tomorrow, so you will have to assess not only short-term advantages, but also in the future.
Perhaps the tax advantages are now an interesting incentive. Of course, remember that when you have your savings at the time of reaching retirement, the payment of high taxes could become a nightmare.
Also, the fact that you can not access your capital until you become a retiree can make you dizzy. It may happen that before that moment you have some economic needs and you can not satisfy them because you can not recover that money.
Therefore, it is vital that you value the advantages and disadvantages as well as the different possibilities of obtaining money. In this context, online credits represent a relief for many people because they already know that, whatever their situation, they can obtain a quick loan without papers to solve their liquidity problems.
With all this information and data, it will be easier to know if the pension plan does or does not suit you.