What is a private pension plan and which companies offer it

pensions and ongoing reform of the current public system and pay-as-you-go with the aim of guaranteeing those benefits for the next three decades are already an important part of the political, social, economic and civil debate, because any decision made now will be transcendental and will determine a higher or lower amount of future pension pay and pensioner benefits. Percentages, figures, averages or salary increases do not bypass this discussion, which suggests that pensions, achieved thanks to decades of work, are on average higher than a good part of salaries, but that in a more than significant percentage they are higher than 50%, they do not reach 1,000 euros, equivalent Interprofessional minimum wage (SMI).

But how much do retirees actually earn? Few statistics can reflect the income – always average – received by this heterogeneous group – it is difficult to find an equal benefit – and whose payments are determined by dozens of circumstances. The reference of the main monthly salary can be found in the statistics Social securitybody headed by Jose Luis Escrivaand shows that up to 380,000 pensioners received the maximum pension of 2,820 euros in 14 payments, and in some cases a little more, due to delayed pension supplements or gender differences.

Differences between private, public pension and pension plan

However, these are public pensions, but there is a lucky group of workers who also receive private pensions, paid by the company and which must be applied for, to complement the benefits of the current funding system. It is precisely these contributions generated by company pension plans that mean that there is an ‘elite’ of pensioners who receive more than 45,000 euros per year, which is an amount higher than the maximum pension. Tables of Tax agencythe last ones are dated 2020, show that until 110,000 taxpayers they received pensions significantly higher than the maximum and always more than one – public and private.

The figure has certainly not changed much compared to the last fiscal year 2021, and statistics show that up to 20,500 retired taxpayers receive benefits of more than one hundred thousand euros. these “carpenter” it was the high-wage workers who also benefited from these private plans. A very important plus in meeting retirement for pension compensation, with very important differences between self-employed and recipients, men and women, new retirees and pensioners in the system and regional. Pensioners who declare higher pensions receive an average of 2.3 compensation and also an average of 173,829 euros, according to data from the Tax Administration.

All pensioners are required to apply, although those receiving benefits for permanent disability, invalidity, orphans or exceptional terrorism or gender-based violence do not pay the state pension. As pointed out at Information Jose Maria Mollinedogeneral secretary of the treasury technician (Gestha), retirees pay the treasury their income from work, although in many circumstances, such as age or disability, their bills to the treasury are lower, “but the same thing could happen to a worker who is still active after 65 . or has some degree of disability”.

He points out that the same can happen to a pensioner with minor children, who can use certain fiscal benefits more intended for young taxpayers. A look at the Ministry of Finance’s statistics shows that men are the majority of those who benefit most from company pension plans, eight out of ten. Data from Tax Agency, concerning 9.5 million pensioners also show differences in wages, since in 2020 up to 2.6 million pensioners received less than 9,000 euros per year, divided into 14 payments. Meanwhile, the average pension for the state treasury is 15,941 euros, with significant differences between men (18,458) and women (13,412 euros).

What are corporate pension plans?

Company pension plans, a very attractive bonus or bonus that companies give to their workers and from which they benefit from high incomes, are a savings instrument that, through small contributions, supplement the public pension when the workers leave. In the context of uncertainty and change, they are very interesting. It is the company that gives monetary contributions, although, exceptionally, some are open employee contributions.

Three types of company pension plans. Differences

as collected BBVA On his pensions blog, there are three types of pension plans for companies: Defined contribution: the annual amount that both the company and the worker contribute to this company pension plan are previously determined by both parties. “This does not guarantee or define, and this is something to consider, the amount of benefits that will be realized in the future under the said plan.” Defined compensation: the amount to be collected by the pensioner is previously agreed upon and is linked to the working circumstances of the salaried or senior worker. i.a mixed system, which combines the previous two.

How to manage business plans and taxation

The company pension plans are linked to the pension fund and their management depends on the management company, which supervises them General Administration of Insurance and Pension Funds. Representatives of workers, companies and beneficiaries are involved in the development and good management of these interesting private plans. A solution to the public pension crisis, but it requires a very important additional effort by companies. Referring to taxationare considered returns in kind in income tax, and as such must be included in the income tax return. The limits established in 2022 were 8,500 euros for a company and 1,500 euros for a worker per year.

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