We are all looking forward to peace of mind and security when we retire. That is why it is important to use the present to plan for the future. Here you will find all the answers to the main questions about retirement.
What will I earn when I retire?
The general ageing of the planet's population poses challenges for most advanced economies. Faced with this situation, the system has introduced adjustments such as, for example, the progressive delay in the retirement age from 65 to 67 years old. The European Commission considers that new adjustments are likely to be made, but this time in relation to the replacement rate, that is, the state pension payable as a proportion of the final salary. In Spain this ratio is currently around 75%, which is a high figure compared to other European countries. Specifically, it is estimated that this rate will continue to fall to 40% in the long term, meaning that when we retire we will lose 60% of our purchasing power. This is why it is increasingly important to financially plan our retirement.
How many years of contributions do you need for a pension?
Since 2013, the retirement age has gradually increased each year and will reach 67 years old in 2027. To earn a full pension, you must have paid social security contributions for more than 35 years, a figure that will increase to 38 and a half years in 2027.
How can you retire early?
If you want to retire early you must have paid social security contributions for a minimum of 30 years. There are different types: voluntary early retirement (63 years old and 35 years of contributions, previously 30), forced early retirement (now 61 years old and 33 years of contributions), ordinary retirement, which will be 67 years in 2027, early retirement at 61, special retirement at 64, and so on. In any of the cases, taking early retirement means a penalty in terms of the pension you will earn.
Partial retirement or flexible retirement?
Flexible retirement is for those pensioners who have completely retired but at a certain point decided that they want to return to active life. Partial retirement is aimed at people who have not yet retired, who want to receive a pension but who will continue working.
How to supplement your pension?
When it comes to saving, the sooner you start, the better. That way, you have more time and saving is less of an effort. In addition, perseverance has its rewards. No matter how small the amount saved, being in the habit of saving and having the time to allow your savings to grow is key to reaching your target on retirement.
The calculations are hypothetical cases that include an estimated average return of 3.4% in a pension plan and increasing monthly contributions (2% per year). The final saving is calculated assuming that retirement occurs at 67 years old.
An annuity is the monthly income that you will receive for life with the aim of covering a drop in income or for when you retire. When redeeming a PIAS (Systematic Individual Savings Plan) in the form of an annuity, the payments are tax-exempt.
Frequently asked questions
VIDACAIXA S.A. DE SEGUROS Y REASEGUROS, like all other insurance and financial institutions, is required to have an up-to-date copy of the current identification documents of customers to comply with the provisions of Law 10/2010 on the Prevention of Money Laundering and Financing of Terrorism.
The insurance institution must have the required documentation before 30 April 2015. If this is not the case, the products that have been taken out with our company will be blocked.
In the case of retirement:
When you retire, you will have to decide how and when you want to collect on your plan by contacting your branch of "la Caixa".
If you do not have entitlement to retirement (due to the fact that you have never paid social security contributions, etc.), the contingency will be deemed to have occurred after the ordinary retirement age in the General Social Security System (65 years), at the time when the participant does not work or has ceased working and is not contributing towards the retirement contingency in any social security system. However, the benefit may be paid in advance as from:
- age 60
- age 45, if the policy holder is disabled
In the case of disability:
The plan may take effect in the event of total and permanent disability for the usual occupation, or absolute and permanent for any type of work, or severe disability.
In the case of death:
In the event of death, both in the period in which the contributions are made (participant) and in the period in which benefits are received (beneficiary).
In the case of serious illness:
When it is accredited with a medical certificate from the Social Security or an approved body:
a) any physical or mental illness that temporarily incapacitates the patient for a continuous period of at least 3 months and that requires a major surgical intervention in or treatment at a hospital.
b) any physical or psychological illness or injury with permanent consequences that partially limits or totally prevents the usual occupation or activity, whether or not assistance is required from other people.
In the case of long-term unemployment:
When the participant is legally unemployed (not voluntary), provided that he or she is registered with the National Employment Institute (INEM) or the competent body and does not receive contributory benefits.
In the event of death, either during the period in which the contributions are made or in which an annuity is already being received, the accumulated balance will be paid to the spouse, children or any other person who has been named by the policy holder.
As a capital sum:
All accrued consolidated rights are paid in the form of a one-off capital sum.
As a financial income:
This consists of an income, the amount and frequency of which (monthly, quarterly, half-yearly) is decided by the customer and which is paid until the accumulated balance is exhausted. The balance outstanding or part of it may be paid at any time, in which case the subsequent annuities will not be paid until the balance advanced has been offset.
As a capital sum and financial income (mixed):
One part is collected in the form of capital and the other part in the form of financial income.
As an assured income or as an insurance:
It is possible to receive an annuity for life, for one or two lives, and with or without life insurance. Furthermore, if you wish, you can choose to take out an annuity for a certain period of time, but without capital on death.
A pension plan is a product that allows you to save in a convenient way so that you can have a capital sum or an income at the time of retirement or in the event of invalidity and in the event of death, so that your beneficiaries can receive it.
But also, at the moment, pension plans are the product that allows you to obtain the maximum tax saving in your income tax return.
Maximum annual contribution:
The maximum annual contribution you can make is €8,000.00.
This limit includes contributions to all pension plans, insured benefit plans, company benefit plans, certain Mutual Benefit Societies and private insurances that exclusively cover the risk of severe dependency or major dependency, and also includes company contributions.
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