They are possibly the two best-known and most widely used collective savings products in Spain for investing, especially in the long term and with retirement in mind.
However, when choosing one product or another, there are important differences between an investment fund and a pension plan. Knowing them will allow you to make a fully informed decision on the product that best suits your circumstances and stage of life.
Table of Contents
Main differences between Investment Fund and Pension Plan
Liquidity
Taxation
Offer
Costs and commissions
Invest in pension plans and investment funds with inbestMe
Main differences between Investment Fund and Pension Plan
Liquidity
The main difference between investment funds and pension plans is their liquidity.
The funds allow you to recover your investment at any time, and in a few days (between 3 and 4 business days, depending on the entity), you will have the money in your current account, once the corresponding withholdings have been made.
Pension plans, on the other hand, are illiquid products that can only be redeemed if some of the contingencies occur (retirement, work incapacity, great dependency, severe dependency, death), or some of the exceptional liquidity assumptions contemplated (serious illness, long-term unemployment, liquidity due to seniority of contributions from January 1, 2025).
Taxation
At the fiscal level, there are also significant differences between the two instruments.
Investment funds are taxed like other investment gambling data brazil phone number instruments, since the profits generated are taxed in the savings tax base along with the rest of the capital gains.
Pension plans have a different tax treatment than other investment vehicles.
To begin with, because the contributions made to this instrument are deductible from the general tax base of personal income tax, up to a maximum of €1,500 (in 2022) or 30% of the net income from work and economic activities.
In the event of redemption of the plan, all vested rights will be taxed like the rest of the income from work.
What both products have in common is that capital can be transferred from one fund to another or from one plan to another without any tax impact.
That is, you can transfer part or all of the capital from one product to another of the same nature without having to sell first and then buy.
This way, you will save on both taxes and commissions, if applicable.
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Offer
Both investment funds and pension plans are divided into a number of different categories that adapt to any type of investment profile.
Such as fixed income, variable income, mixed, guaranteed...
However, the reality is that the range of pension plans in Spain is much smaller when compared to investment funds, where there is a much wider variety.
However, in recent years, entities have begun to market a wider range of products, such as indexed pension plans, where inbestMe is a leader especially in its Sustainable Pension Plans aspect .
Costs and commissions
Pension plans have different costs than investment funds. In fact, their maximum commissions are limited by law.
Thus, the maximum deposit fee that a pension fund can charge is 0.20% of total assets, and the management fee is 1.25%.
However, these commissions differ depending on the type of product:
If it is fixed income, the maximum commission is 0.85%, if it is mixed income, the maximum commission is 1.30% and if it is variable income, the commission is 1.50%.
In investment funds, Royal Decree 1082/2012 also establishes a maximum for the management fee that collective investment entities can charge.
Thus, as a general rule, management fees may not be charged which, in annual terms, exceed the following limits:
In the event that the commission is calculated solely based on the fund's assets, 2.25% of these.
When calculated solely on the basis of results, 18% of these.
When both variables are used, they use 1.35% of the assets and 9% of the results.
However, the greater variety of investment funds means that investment funds have lower fees than pension plans, especially index funds.
Invest in pension plans and investment funds with inbestMe
With inbestMe you can invest in both a portfolio of pension plans and a portfolio of investment funds.
inbestMe will keep the portfolio adjusted to your investor profile and, if your personal situation changes, you can always adjust your risk profile and the weight of variable income and fixed income. All this with low costs and adapted at all times to your financial situation.
At inbestMe we do not offer tax advice. The information published in the article should not be taken as such, as it is for informational purposes only and generally contains examples that usually apply to individuals resident in Spain. Our recommendation is to always consult tax aspects with a specialized professional. Each situation or personal circumstance may have very specific characteristics that require a detailed analysis of it.
