With the 2014 reform of pension plans by Royal Decree 62/2018, from January 2025 it will be possible to redeem a pension plan without having to wait for a special case such as retirement, disability or long-term unemployment. It will only be necessary that more than 10 years have passed since the contributions were made to the plan. The accumulated capital that meets this condition can be withdrawn without giving any explanation to the financial institution.
We would like to remind you that as of January 1, 2025, the possibility of redeeming pension plans that have been in existence for more than 10 years without the need to justify special situations such as retirement, disability or long-term unemployment is now available. This measure, derived from the reform implemented by Royal Decree 62/2018, expands the liquidity and flexibility of these financial products, benefiting millions of participants.
1. Main changes in regulations
- • Redemption without exceptional justifications: From 2025, vested rights corresponding to contributions made up to 2015 may be redeemed, provided that at least 10 years have elapsed since the investment.
- Reduction of commissions: The regulations have also lowered management fees, averaging 1.25% and up to 0.85% in fixed income funds, to make the plans more accessible and profitable.
2. Rescue options
Participants may dispose of the vested rights of their plans in three main ways:
- In the form of income: It allows receiving periodic payments, reducing the tax impact by distributing the income over several fiscal years.
- In the form of capital: This implies a single payment of the entire amount, which can considerably increase the taxable base and the applicable marginal personal income tax rate.
- In mixed form: Combination of income and capital, adjusting to the needs of the participant.
3. Taxation of ransom
- Taxation as earned income: The redeemed capital is included in the general income tax base, added to other income and affecting the applicable marginal rate.
- 40% reduction for contributions prior to 2007: If you redeem contributions made before January 1, 2007 in the form of capital, you can benefit from a 40% tax reduction, provided that the redemption is made in the year in which the 10-year period is completed or in the following two years.
- Second payer impact: The redemption counts as a second payer, which could generate the obligation to file a tax return if the income exceeds the established limits.
For more information, please consult with Tax consulting
If you found it interesting share it on social networks, thanks!
