Economic rights originating from an EPSV will help you to:
- Maintain quality of life for you and your family once you retire.
- Obtain tax deductions for contributions made over the years.
The sooner you plan your supplementary pension in addition to your public pension, the sooner you will achieve what we call the “capitalisation miracle" that consists in obtaining the highest possible profits or yield with as small an effort as possible.
As the contributions made are added to the yield that is gradually generated, total equity increases over time and profits grow progressively with very little effort.
We will now introduce a number of basic notions to help you have a better understanding of how important EPSVs are.
EPSVs were born in the Basque Country
EPSV: an institution born and bred in the Basque Country. Even so, many similarities can be found throughout Spain and Europe in the form of Spanish Mutual Social Security Schemes or European Pension Funds.
Governing regulations and administrative monitoring applicable to EPSVs
EPSVs are a Basque institution governed by the regulations approved by the Basque Parliament and Government. The Basque Government is in charge of monitoring and supervisory actions.
The aim of EPSVs
The aim of EPSVs is to supplement the public Social Security so that, once the age of retirement has been reached, an associate receives an amount that is as close as possible to the last sum paid in the form of wages for an active worker.
The importance of EPSVs
On December 31, 2016 EPSV equity exceeded 24 billion euros and accounted for more 33.7% of the Basque Country’s GDP. This figure nearly quadruples other Spanish systems and is similar to the EU 15 average.
Contributions exceeded 755 million euros with slightly over 1,100,000 accounts. This means that nearly half the active working population enjoys coverage of this kind.
Benefits paid in 2016 by EPSVs have exceeded 870 million euros, which means that over 4,500 million euros have been paid during the last 5 years.
The advantages of subscribing to an EPSV
- You and you family will maintain quality of life after retirement.
- Tax benefits apply whilst contributions are made.
When and how much you should pay into an EPSV
- It is advisable to start making payments into an EPSV as soon as you find a job.
- It is recommended that an amount sufficient to reach 20% of your last salary be paid.
How and when can you collect an EPSV?
Whenever any of the contingencies covered by the EPSV by-laws occur, namely, retirement, permanent disability, death, severe disease or long-term unemployment.
Generally speaking, and in the case of individual and associate EPSVs, economic rights can be recovered by year ten counted as from when the initial EPSV payment was made.
How can you collect from an EPSV?
- Income (regular payments)
- Capital (only one payment)
- Mixed (by combining both of the previous modalities)
Taxation applicable to EPSV contributions and benefits
Fiscal incentives apply to EPSV contributions based on reducing the general taxable base of Income Tax. Any amounts received from an EPSV, however, are taxed as earned income in terms of the Personal Income Tax.