Formulas to complement retirement: from pension plans to real estate investment
Insured products, investment funds, housing or pension plans, axes in savings planning
Planning for retirement ahead of time is an exercise that everyone should do. Decades in advance would be ideal, given that time is the key to obtaining relevant assets that help complement the public pension when work activity ceases. The other key is to diversify and for this today there are different products in Spain: from traditional pension plans – today less attractive than years ago after the reduction applied in the maximum contributions – to investment funds, insured products or investment in housing.
The experts consulted agree that insurance products can be useful, but not as a universal solution, but as a complement to well-constructed estate planning. “Its main contribution is to cover the risk of longevity: living longer than expected and needing to transform accumulated capital into periodic income,” says Munesh Melwani, general director of Cross Capital.
Among the insurance offering, Eva Valero, director of life, savings and pensions at Helvetia Caser, highlights the individual long-term savings insurance (Sialp) “in which you can save up to 5,000 euros annually, which guarantees at least 85% of the capital saved and which, if maintained for at least five years, is not taxed on the profits obtained” and the individual systematic savings plan (PIAS) which “is similar, but for a longer term, since you can save up to 8,000 euros annually for a minimum of five years, and if it is redeemed in the form of an annuity, the capital gains obtained are also exempt.”
For her part, Ana Moreno, head of Ibercaja’s private banking and personal banking business in Aragon, is committed to insured pension plans (PPA) “with a fixed return, total flexibility, permanent supervision by the Administration and control by the insured themselves, with the same tax treatment as pension plans, so it may be suitable for those clients who want certainty or who are approaching retirement and wish to eliminate any uncertainty in the capital accumulated over the years.”
Ramón Alfonso, partner at Norz Patrimonia EAF, recalls that, historically, stocks have offered superior long-term returns, especially when dividends are reinvested. However, “housing provides other advantages such as being a tangible and easily understandable asset, with partial protection against inflation, the possibility of generating periodic income through rentals and less apparent volatility than financial markets”, so it can be useful in diversified estate planning.
For María Sánchez, director of institutional relations and business development at Avanza Previsión, housing should not be the only estate planning tool either. “An adequate strategy must combine real estate assets and financial savings, seeking a balance between profitability, liquidity and security,” he defends. Insurance products play a particularly relevant role here, “since they allow accumulated savings to be converted into periodic income, providing stability and predictability to income during retirement.”
As the Avanza Previsión expert summarizes, “the great challenge of retirement is not only to arrive with assets, but to have a strategy that allows you to convert that capital into a sustainable source of money over time.”