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PENSIONS

The best private pension plans in Spain

Spain's ageing population and falling birth rate has led many people to expect that public pensions will be affected in the future. Knowing the best private pension plans available in Spain could save you some stress in the long-term.

Published: 4 April 2024 10:28 CEST
Updated: 7 April 2024 12:18 CEST
private pension plans spain
VAT is just one more confusing piece of German bureaucracy. Photo: Mathieu Stern/Unsplash

Spaniards don’t tend to invest in private pensions. Estimates suggest that just 16.4 percent of them have at least some of their retirement savings deposited in private plans, meaning that the vast majority of payouts come from the public coffers.

In fact, OECD data on pension plans shows that the weight (in terms of GDP) allocated to private pensions products in Spain is seven times lower than the OECD average.

Spain’s total private assets amount to just 14.3 percent of GDP, a far cry from the OECD average, which is slightly above 105 percent, and Spain ranked 25th out of 38 countries in one OECD report.

This has led many to worry that Spain’s public pensions could be at risk in the medium-term future.

You can read more of The Local’s coverage of the uncertainty of Spain’s public pension system below, but in short the reasoning is that long-term demographic change, slowing birth rates among Spaniards, plus the looming prospect of a larger than usual cohort of baby boomer retirees and the types of pensions they usually claim mean that, if Spain is to avoid pensions payouts swallowing up more and more of its economy, then changes will be needed — sooner rather than later.

READ ALSO: Will there be no public pensions in Spain in the future?

As such, for fear of there not being a public pension for them in the future, many younger people in Spain may now be considering private plans. And owing to the fact that the vast majority of Spaniards opt for public pensions, private pensions often get overlooked.

Here are some of the best available in 2024

Best variable income pension plans in 2024

A variable income plan is essentially one in which the payout fluctuates depending on how well the plan’s investments (ie. where your pension money is actually invested) perform over time.

Here’s a list of the best variable pension plans in 2024, ranked by annual performance:

Azvalor Global Value PP: 47.40 (percent)
Cobas Global PP: 9.73
Magallanes European Equities PP: 5.39
Horos International PP: 5.22
Ontinyent Magallanes PP: 4.84
Caser Magallanes: 4.78
Caser Gestión de Valor PP: 4.78
SA Nostra Magallanes Equity PP: 4.57
Santander ASG Acciones España: 3.57 percent
Santander ASG Equities Spain: 3.82
Dunas Selección Europe F&F: 3.38

Best mixed pension plans for 2024

Mixed pensions plans are generally when the investment in variable income products may not exceed a third or 30 percent, depending on the bank or entity, and the remainder of the pot is fixed.

Azvalor Consolidation: Annual return: 15.98 percent, 3 year return: 8.03 percent
Cobas Mixto Global: Annual return: 6.94, 3 year return: 3.12 percent
Feelcapital 50: Annual return: 3.07, 3 year return: 2.93
Dunas Valor Flexible F&F: Annual return: 2.84 percent, 3 year return: 3.67 percent
Dunas Flexible Value 2: Annual return: 2.18, 3 year return: 2.98 percent
Dunas Balance Value F&F: Annual return: 2.02 percent, 3 year return: 2.11
Atl Capital Conservador: Annual return: 1.71 percent, 3 year return: 1.89 percent
PP Ind. Gesnorte: Annual return: 1.46 percent, 3 year return: 1.55 percent

READ ALSO: How many years do I have to work in Spain to get a pension?

Long-term returns

Obviously, pension plans are long-term investments, especially if you’re young and thinking ahead. A pension plan that performs well in one year doesn’t necessarily mean it will perform as well later on down the line.

Therefore, you should also think about long-term performance when choosing a pension plan. Below is a list of the best variable income pension plans in Spain according to their three-year annualised returns:

Azvalor Global Value PP: 23.53 percent
Magallanes European Equities PP: 15.53
Horos International PP: 12.39
BK International Variable PP: 9.93
Merchbanc Global PP: 9.56
BBVA Telecomunicaciones PP: 8.93
Ibercaja Pensiones Bolsa USA: 8.93
CNP Partners Activo: 8.80
CNP Partners Assets: 8.16
Santander ASG American: 8.10
Orange S&P 500 PP: 7.50

READ ALSO: The best high-yield savings accounts in Spain

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PENSIONS

Irish pensions in Spain: What you need to know

If you're an Irish pensioner who's thinking of moving to Spain, here is what you should know about where your pension will be taxed, which pension plans are tax liable in Spain and how much Spanish tax rates are.

Published: 14 May 2024 14:18 CEST
Updated: 19 May 2024 14:58 CEST
Irish pensions in Spain: What you need to know

Go to any popular tourist resort in Spain and you’ll likely bump into some Irish people. The Irish have long come to Spain, particularly the Alicante, Andalusia and Canary Islands areas. But many Irish are increasingly making the move over to Spain full-time. 

According to population data from Spain’s National Statistics Institute (INE), as of the end of 2022, the latest available data, there were 19,491 Irish nationals living in Spain. 

READ ALSO: Where do Spain’s Irish residents live?

Many of the Irish in Spain are retirees, who, like retirees from around the world, have come to Spain for a change of pace, the climate, cuisine, and (relatively) cheap cost of living combined with high standard of living.

Often, they are living off their pensions alone. Keep in mind as well that even though being an Irish national makes it fairly straightforward to retire to Spain because of your shared EU rights, you still have to register as a resident after 90 days in Spain and that you may be asked to prove an income of €600 per month (pension or otherwise) as well having private healthcare or public through the S1 health form.

So how does receiving an Irish pension in Spain work?

Irish pensions in Spain

Ireland and Spain have a double tax agreement, signed in 1994. This essentially removes the possibility of paying tax twice on your pension, and in most cases the tax responsibility is ceded to the country where the recipient is a resident, in this case Spain.

However, it can depend slightly on the type of pension you receive, and whether it’s an occupational pension (otherwise known as a private pension plan) or a public sector pension from a public sector, government, or civil service career.

Let’s have a look at what the treaty says:

Article 19:

(a) Pensions paid by a contracting state or by one of its political subdivisions or local authorities, either directly or out of constituted funds, to a natural person in respect of services rendered to that state, subdivision or local authority may be taxed only in that state.

(b) However, such pensions may be taxed in the other contracting state only if the individual is a resident and a national of that state.

Legal jargon aside, what does all this actually mean? 

Essentially, if you get an Irish public sector pension (this is what ‘a contracting state or by one of its political subdivisions or local authorities’ seems to mean) it will be taxed in Ireland as before unless you are both a Spanish national and tax resident in Spain.

So, if you’re an Irish national resident in Spain, your public sector pension will be taxed in Ireland unless you have acquired Spanish nationality.

This is confirmed by the Irish government here: “You may be receiving an Irish pension from the Government or a local authority. In general, this pension is taxed in Ireland regardless of your residence status. Refer to the Government Services article of the Double Taxation Agreement between Ireland and the country you intend to be resident in.”

Private/occupational pensions

Now, what about private or occupational pensions? Generally speaking, if you receive a private pension from an Irish company, you’ll be taxed in whichever country you’re tax resident in.

Per the Irish government: “If you receive an Irish occupational pension from a private sector employer, your pension will be taxed in the country that you are tax resident in if you are both:

To make sure you aren’t taxed in Ireland, you can request a PAYE Exclusion Order.

How much are Irish pensions taxed in Spain?

As stated earlier, state pensions from any country are treated as earned income by the Spanish system.

Therefore, Irish pensions in Spain are subject to progressive tax rates ranging from 19 percent to 47 percent:

Up to €12,450 in pension funds received in a tax year: 19 percent
€12,451 – €20,200: 24 percent
€20,201 – €35,200: 30 percent
€35,201 – €60,000: 37 percent
€60,001 – €300,000: 45 percent
Over €300,000: 47 percent

The amount of tax you need to pay on an Irish pension can also depends on other factors, especially the fact that the threshold changes depending on whether it is the claimant’s only source of income or not.

According to Spain’s Article 96.3 of the Income Tax Act, when a foreign taxpayer resident in Spain earns a pension from a foreign source but has other sources of income, the threshold to declare this income is €15,000 a year. However this changes if their pension money is their only source of income and it’s from a single source, in which case it’s €22,000.

There can be exceptions such as when combined earnings from non-primary sources of income are no higher the €1,500 a year, but it’s advisable to check this with a tax expert to analyse your specific circumstances.

READ MORE: The charms and challenges of life in Spain for its Irish residents

What about ARFs and PRSAs?

If you withdraw money from either your Approved Retirement Fund (ARF) and Personal Retirement Savings Accounts (PRSA), you will be taxed at source regardless of your residence status, so in Ireland.

According to the Irish Tax Institute, “owners of ARFs, vested PRSAs and AMRFs who are not resident in Ireland may be subject to taxation on this income, both in Ireland and their country of residence and subsequently tax relief may be available under the terms of a DTA (Double Taxation Treaties)”, which Ireland has with Spain.

Please note, we are at The Local are not financial experts. The information above is designed to help, but if you are unsure of what steps to get yourself in order tax-wise, seek professional advice.

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