How to redeem or transfer a pension plan in 2025

Traditionally, pension plans could be withdrawn upon the occurrence of contingencies such as retirement, incapacity for work, death, a severe dependency or high dependency. In addition, there are exceptional cases liquidity problems, such as long-term unemployment or serious illness.

However, a legislative modification introduced in 2014 allows, as of January 1, 2025, the redemption of contributions with at least 10 years of seniority, without the need to justify any contingency or exceptional event. This means that the contributions made up to December 31, 2015 may be redeemed as of January 1, 2025. Each year thereafter, the following may be redeem the contributions that meet the 10-year vesting period.

Forms of redemption and their taxation

When a pension plan is withdrawn, the capital obtained is considered as income from the pension plan. The income tax is paid at work and is subject to personal income tax (IRPF). The forms of rescue are:

– Capital: All the accumulated money is received in a single payment. This modality can increase the IRPF taxable base in the year of redemption, increasing the tax burden.

– Income: Periodic payments are received (monthly, quarterly, etc.), which may allow for better tax planning by spreading the income over several years.

– Mixed: Combines a capital payment and the remainder in the form of rent.

It is important to note that, although contributions to pension plans reduce the taxable income for personal income tax purposes at the time of their the IRPF taxable base at the time of making them, upon redemption of the plan, the amounts received are added to the income from work and are amounts received are added to earned income and are taxed according to the tax rate of the plan. progressive tax scale. Therefore, it is essential to plan the redemption and seek the advice of a qualified professional to minimize the tax impact.

Transfer of pension plans

Pension plan participants have the possibility of transferring their vested rights between different plans, either within the same entity or between different entities. to a different one. This transfer does not generate any tax impact and allows the participant to adapt your investment strategy according to your risk profile, time horizon or return expectations. return expectations.

The decision to redeem or transfer a pension plan should be based on a personalized financial planning, considering factors such as the situation liquidity needs, risk profile and profitability expectations. It is advisable to seek the advice of financial professionals to optimize the advantages and to adapt decisions to personal circumstances.