The timing of retirement can be an exciting opportunity for many people. While it may involve some changes in capabilities over time and a reduction in recurring income, there are numerous strategies to ensure a comfortable and fulfilling retirement.
For example, establishing a long-term savings plan or taking out a private pension plan can help maintain a stable level of income. With proper planning, retirement can be a time of life full of new experiences and possibilities.
What is a private pension plan?
A pension plan is a long-term savings product designed mainly for retirement, in which the individual deposits money that he/she will receive later, when he/she retires, in the form he/she chooses (capital, income, mixed…). This configuration makes it a perfect complement to the future public retirement pension.
Moreover, this type of product has an additional advantage, as it allows you to deduct a certain amount of money every year in your income tax return. And although that figure has been reduced over time, it is still a feature highly valued by many investors.
Types of private pension plans
As for the format of private pension plans, you should know that there are three main types:
- Individual plans: those that each individual contracts with a financial entity on his or her own initiative.
- An associated plan: those that are usually promoted by groups, guilds or other associations, and which therefore exist in direct connection with a group.
- An employment plan: promoted by companies for their employees, in which the company itself also contributes.
Characteristics of private pension plans
The main characteristics to consider when deciding on a pension plan are:
- Tax benefits: the possibility of reducing your tax burden, thanks to the contributions to the pension plan, is always one of its greatest assets. Mainly because it is the only investment product that allows it. Currently, this amount has been reduced to a maximum of 1,500 euros in individual plans and 8,500 euros for employment plans.
- Their flexibility: pension plans are products that make it very easy to change plans, fund managers or even individuals. This also makes them very attractive products.
- Contributions: another particularity of pension plans, unlike public plans, is that you can modulate what you contribute to your fund. This allows you to increase your contributions when your economy is doing well and reduce them, or even stop contributing, if the situation worsens.
How does a pension plan work and what to look out for?
Understanding how a pension plan works is vital, as it will allow you to look at some important details if you are going to contract one. In a few words, the holder of the plan contributes in it, periodically (but not fixed) or extraordinarily, an amount of money that, from that moment on, is managed by the financial entity in which it is contracted, which is in charge of obtaining the highest possible profitability.
However, this ‘highest possible return’ has different approaches. The first is to adjust it to one’s risk profile, which is divided into conservative, decisive and moderate.
The second is to bear in mind that if you pay lower fees you can generate a higher total return. Hence, one of the keys you should pay attention to, along with other obvious ones such as transparency or the reliability of the fund manager, is that the expenses are reduced.
Where to contract a private pension plan?
The last point opens an intense debate in the investment industry: do I contract my pension plan with a bank? Normally, banks manage an important part of the pension plans in Spain. However, that figure has been dropping over the years, the reason being the arrival in the sector of other competitors offering a similar or improved service at more competitive prices.
This is the case of roboadvisors, such as inbestMe (a platform with more than five years of experience), which, thanks to its own configuration of automated managers, makes it possible to generate a wide variety of portfolios adjusted to each profile and with reduced commissions. In addition, they have all the guarantees, since they are supervised by a team of experts.
Characteristics of automated private pension plans
The market share that roboadvisors have been gaining over time is not only due to their competitive costs, but much more. In fact, another highly valued feature is their wide product offering.
Roboadvisors have been adding functions and products to their catalogs, so that they now offer their clients a wide variety of possibilities. In the case of inbestMe, for example, it not only offers ‘standard’ automatic private pension plans, but also products with a Socially Responsible Investment (SRI) designation. In this way, in addition to finance, it also aims to improve the world.
Transparency is another advantage that roboadvisors have worked hard to offer when offering pension plans. After all, as they are automated products, their movements are transparent in terms of their operations and results. Also in terms of the commissions that you are going to pay in all cases, without hidden fees or changes in conditions.
inbestMe, the best option for taking out private pension plans
The advantages offered by inbestMe, as one of the most prominent roboadvisors in the market, have allowed it to gain market share among investors year after year. In the case of its private pension plans, the platform has two different ones, moderate and aggressive, which seek to make savers’ capital grow according to their profile. In addition, with a wide range of products, with SRI funds or green bonds, and at very competitive costs.
So, if you want to forget about the worries that retirement can bring, do not hesitate and contact inbestMe, since it not only offers you results, but it will also make the process easier for you, thanks to the fact that it will facilitate the management and optimization of the contributions among other things, so that you do not have to worry about anything.
