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Is a pension plan recommended in Spain?


Retirement in Spain

Very widespread concern for almost all the self-employed is their future retirement pension. The truth is that the possibility of increasing the obtained income in this last stage of your life is limited. Even less if you have been self-employed in your last years. We are going to see the options…

Most of the self-employed contribute by the minimum base since this means paying low Social Security contributions. That means that the average pension that you can receive will be about 694 euros per month.

The options to see this amount increased are the following:


Increase in the contribution base

If your income allows it, you can increase the contribution base and thus increase the pension you will receive in the future. However, be careful with the dates as there are limitations.

A common practice until a few years ago, it was just before the last 15 years, the period with which the contribution base for the retirement pension was calculated, at age 49, people increase their Social Security quota. After the Retirement reform, Social Security included certain limitations:

  • The self-employed will be able to modify the contribution base by free will until the age of 46. From the age of 47, limitations are depending on who has been contributing.
  • They modified the criteria for determining the regulatory base and the retirement age. So that it has passed from 15 to 25 years, its establishment is being implemented progressively, and on the other hand, from 65 to 67 years, also progressively.


Hire a pension plan

In this way, you can complement the public benefit with a private fund. Pension plans have certain advantages, especially for the self-employed. On the one hand, the monthly contributions destined to the pension plan are deducted from personal income tax, thus reducing the payment of taxes.

On the other hand, pension plans offer flexibility in their fees so that you can adjust them to your income at all times. The maximum amount is 8,000 euros per year or 30% of the net income from work.

And yes, there is no minimum contribution, plus many of them allow freezing, that is, if you are going through an economic downturn, you can stop contributing for a while to resume it when things improve.

By providing an interest rate, think that you increase your savings! Let’s see an example. If you contribute 100 euros a month for 15 years, you will receive about 40,000 euros in your retirement.


Although you should take into account the following detail: When the retirement date arrives, and you want to rescue the plan, keep in mind that it is considered work income at the time of its rescue so that it will be added to the income of that year. That year you will have to pay taxes for all this, with the tax rate of the section reached.

As always, our advice is to consult with an advisor specialized in the matter before making any decision or action. They will study your particular conditions and will always propose the most advantageous option.


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