Which pension plan most interests me?

Factors such as age and risk profile are necessary in order to know what the best pension plans are for every scenario

Nowadays, many people are considering the option of opening a pension plan to supplement their public pension when they retire. Due to their growing demand, there is an increasingly wide range of them on offer. This is why, before taking the plunge and signing anything, you should ask yourself the following question: which pension plan interests me the most?

When it comes to deciding how to pick a pension plan, you have to keep in mind that it can only be redeemed under highly specific and exceptional circumstances, such as retirement, death, serious illness or unemployment, among others. Moreover, from 2025 it will also be allowed where the contributions were made at least 10 years earlier. This means that once we sign up for a pension plan, their characteristics and fees will accompany us for many years. This is why it is essential to study the catalogs offered the banking entities and to choose the best pension plan for us.

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Types of pension plans according to their investment policy

To know what pension plan to choose you have to understand that there are six types of pension plans depending on your type of investment policy established by the Association of Collective Investment Institutions (INVERCO). Types of pension plans:

  • Guaranteed: they have an external guarantee that assures the capital and a particular yield. They are ideal products for people that want to ensure a particular level of savings for retirement – even if it is with limited gains – without running risks or when retirement is very close. It must be taken into account that the guarantee is established at a certain date and that transferring the pension plan or collecting the benefit payments before the guarantee's maturity can result in losses of value for the member or beneficiary.
  • Short-term fixed-income: the investment policy establishes that the pension fund's assets are to be invested in fixed-income products with a duration of under two years, such as Treasury bills. They offer a stable yield which doesn't usually vary much or experience upheavals. However, the fact that they are short term requires the investment to be made in products with low interest rates that provide very little return for the member or beneficiary of the plan.
  • Long-term fixed-income: the investment is focused on fixed-income assets with a duration of over 2 years, such as Bonds and Debentures. This greater duration offers greater returns, but also higher risk due to interest rate fluctuations.
  • Balanced fixed-income: they invest in fixed-income and equity assets, but only a maximum of 30% of the funds are allocated to equities. In a scenario of low rates, these products that include a portion of the portfolio with greater risk can be ideal to try to achieve an extra yield that ensures purchasing power is maintained.
  • Balanced equity: in this case, the percentage of the pension plan's funds that are invested in equities varies between 30% and 75%. The yield increases, but so does the risk.
  • Variable income: they invest more than 75% of the pension plan's capital in equities. For this reason, this type of investment policy is only recommendable if we still have quite a long time to go before reaching retirement, since obviously the yield can be high but there can also be years with losses that we will need to offset.

BBVA pension plans according to the investor's age

BBVA has organized its extensive catalog in order to offer the best pension plans, taking into account the risk profile and age of interested customers.

Knowing which pension plan interests you the most is as easy as visiting BBVA's website, selecting your age range, deciding whether you are a conservative, moderate or resolute investor and reading the characteristics of the plans that fit your responses. This way you will know what the best pension plan is for your circumstances:

If you're under the age of 50 and you consider yourself a conservative investor, you can choose from the “BBVA Plan Multiactivo Conservador” or the “BBVA Plan Renta Fija Internacional Flexible 3-0” BBVA pension plan; the first one invests in balanced fixed-income and the second in fixed-income.

If, in contrast, you're a moderate-risk investor, you can choose from the “BBVA Plan Multiactivo Moderado” and the “BBVA Plan Renta Fija Internacional Flexible” The first pension plan invests in assets of the international market, whereas the second one does so in fixed-income assets only.

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If risk is your thing, you have as many as four different pension plans to choose from: “BBVA Plan Multiactivo Decidido”, which invests in the international market in a diversified manner; “BBVA Plan Renta Variable, FP”, similar to the previous one but investing primarily in European equity assets; “BBVA Plan Jubilación 2030” and “BBVA Plan Jubilación 2040” are two pension plans known as life-cycle plans, which establish an approximate retirement date (2030 and 2040) and the management of which will be adapted, going from assets of greater risk in the beginning to a more conservative management approach as the established retirement date draws closer.

If you're between the ages of 50 and 60 and you're a conservative investor, you can opt for the “BBVA Plan Renta Fija Internacional Flexible 3-0”. However, your range of possibilities expands to include two alternatives if you are a moderate investor, and up to four different alternatives if you are a resolute investor.

As we mentioned earlier, if you'll be retiring around 2025 or 2030, you might be interested in the “BBVA Plan Jubilación 2025” and “BBVA Plan Jubilación 2030” pension plans, which let you "set it and forget it", since they adapt their investment policy to make it more conservative as you near your retirement date (2025 or 2030), thus avoiding unwanted last-minute surprises.

If you're over 60, you too will have to decide what kind of investor you are. “BBVA Plan Mercado Monetario” is for the most conservative investors, “BBVA Plan de Renta Fija Internacional Flexible 3-0” is for moderate investors and “BBVA Plan Multiactivo Conservador” is for assuming a certain risk in exchange for a greater expected return.

Last of all, you should know that BBVA doesn't close the doors to pension plans for you if you are already retired, rather quite the opposite. On the bank's website you can find a catalog of five different products, grouped together by the same criteria as those above.

With BBVA's Pension Plan Calculator, you'll be able to calculate your future public pension, know how much you'll have to contribute to have the life style you want when you retire and choose the product that best suits your risk preferences and age. Understand how to choose a pension plan without any doubts, sign up for a plan and ensure yourself a supplement for your retirement.

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