What are the best performing pension plans?

Discover the keys to finding the pension plan with the best conditions.

More and more working people are beginning to consider the need for a pension plan that allows them to continue to maintain the same standard of living when they stop receiving income from their work. This is why many people seeking to obtain the highest return on their savings as well as attractive tax savings invest in pension plans. Professional management, diversification, and reduced costs, together with the tax benefits of contributions, are some of the secrets behind the popularity of these products. What's more, there is a wide range suitable for all investment profiles, from the most conservative to the most aggressive.

In this article we go over the most profitable pension plans, and we offer you some tips to choose the most suitable one for you, according to the different needs of savers.

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Types of pension plans

Before you can determine which pension plans offer the highest returns, it is important to be aware of the different types of pension plans that exist. One of the ways to classify these plans is by taking into account the type of assets they invest in, as follows:

  • Fixed-income plans: these plans invest in government and corporate fixed-income securities. Although there is high-risk fixed-income, these are typically less volatile assets than equities, for example. This lower risk entails a lower potential return. For this reason, they are the recommended mainly for investors with a conservative profile.
  • Guaranteed plans: guaranteed pension plans offer a percentage of the invested capital at maturity, usually 100% or close to 100%. They also offer potential additional returns that are usually dependent on the behavior of other assets, such as stock indexes. They are best for very conservative customers.
  • Equities plans: these pension plans primarily invest the funds in fixed-income assets, mainly stocks. They offer a higher potential return than fixed-income plans, but also carry a higher risk, which is why they are usually recommended to investors with a more aggressive profile.
  • Mixed plans: they combine fixed-income assets and equity assets in a specific and often flexible proportion. For example, a fund that invests between 25% and 50% of its worth in equities. This margin is left so that advisers can vary the weight of these assets to the market situation

What are the returns on a pension plan and what do they depend on?

The return on a pension plan is a measure of the benefit (expressed in percentage) that the contributor obtains after investing a specific amount of money over a certain period of time. It is important to bear in mind that pension plans do not pay regular dividends like a deposit does, for example. These are capitalization products in which the return derives from the revaluation of the value of the shares. As stated above, the returns associated with a pension plan depend on the type of plan in question.

Recommendations when choosing a pension plan

If you are looking to find the most profitable pension plans, the most important thing you should keep in mind is that there is no perfect plan for every type of saver; the best plan for each person depends a lot on their investor profile and time horizon. That's why you should consider the following factors when choosing a pension plan:

  • The investor profile: there is a wide variety of investor profiles, some of which have greater risk tolerance, while others are a little more conservative. For this reason, the greater the risk tolerance, the greater the potential return that can be obtained through mixed plans or equity plans.
  • Timeline: experts recommend choosing the level of risk based on the proximity of the retirement date. This way, young savers can opt for riskier pension plans than older people, as they have more time to recover from potential losses.
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In short, it is not a question of finding the most profitable pension plan, but rather the pension plan that offers the best potential return when adjusted to the risk that we can and must assume.

In short, finding the most profitable pension plan can be an exhaustive task that requires finding out where the perfect balance between risk and profitability is. At BBVA we know that not all savers are equal, which is why we offer a wide variety of pension plans that adapt to all types of profiles and ages. Go to bbva.es or visit any of our branches for more information on our pension plans.

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