Difference between a fund and a pension plan

Although they get mixed up sometimes, in reality they aren't the same thing. Did you know that?
Pension plans and pension funds are often talked about interchangeably. However, they are not the same thing. This article explains the difference between pension funds and pension plans, as well as their profiles and which services you can contract at BBVA.
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Pension plans

A pension plan is a long-term retirement savings tool. The main aim is to generate savings that during retirement complement the income of the Social Security public pension. Pension plans are a complementary resource and never a substitute for the public pension system.

Pension plans allow participants to receive income or capital chargeable to their accumulated savings, provided that certain contingencies or circumstances exist for their redemption, such as retirement, inability to work, long-term unemployment, or serious illness.

Pension funds

In article 3 of the same decree that regulates pension plans (Royal Decree 304/2004, revised and amended by Royal Decree 439/2007), a definition of pension funds is also provided: “Pension funds are assets created with the exclusive aim of giving effect to pension plans, which are managed, protected and controlled in accordance with this regulation”.

Nevertheless, the regulation highlights that these funds lack a legal character and must be issued by a pension fund management company. In other words, as a participant or beneficiary, you cannot contract the funds.

Pension funds can be seen as a specific type of private investment fund. which is created with the sole purpose of serving as an instrument to channel the rights and monetary obligations established by the plans of which it is composed.

The structure of these funds include two other special features:

  • These funds may be set up as the instrumentation of several pension plans or a single pension plan.
  • The funds are independent of their creditors, meaning they are not liable for any debts of the promoting entities, managers or trustees.
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BBVA products

BBVA deposits your pension plans in prestigious, high-quality funds, and offers a wide range of products for you to find the pension complement that you really want. If you are looking for a plan to give solvency to your retirement, check out BBVA's range of offers. Our bank offers products ranging from fixed-return pension plans for conservative savers to plans with variable returns for more aggressive investors.

Furthermore, at bbva.es you will find useful valuation and calculation tools so that you can start performing some initial calculations. In just a few clicks, you will get accurate estimates of your pension and plan, as well as information about the tax advantages of each product. Check out the information and decide which product best suits your needs and possibilities.

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Pension plan tools

  • How much state pension will you receive when you retire? Find out in three simple steps.
  • Find the pension plan that best suits your savings needs and start planning your future.
  • Our comparison tool will enable you to know the characteristics of all our plans and choose the one that best suits you.
  • With our calculator, you can find out the final benefit you will receive when you retire.
  • Would you like to know how much you can save on your annual tax return if you contribute to a pension fund?