Depending on the types of assets in which the plan invests, or on the composition between different types of assets, we can find the following classification:
- Short and long-term fixed-income: these pension plans invest the capital in both public (Governments) and private (companies) fixed-income financial assets. Fixed-income securities have a lower theoretical risk than other financial products but, at the same time, also a lower expected return. The average duration of the short-term fixed-income portfolio cannot exceed two years. (shorter duration means lower risk) and it will be more than two years in the case of the long-term fixed-income category.
- Balanced fixed-income: these plans invest both in fixed-income securities and in equities, although a capital limit that they can allocate to the latter is stipulated: 30% of the plan total.
- Variable income: these pension plans invest in equity assets, such as listed stocks. These pension plans offer a higher expected return than fixed-income plans, but they are also exposed to a higher risk of losses.
- Balanced equity: these plans combine investment of the capital in equities, to which they allocate between 30% and 75% of the pension plan's capital, and fixed-income assets.
- Guaranteed: in guaranteed pension plans, it is guaranteed that the plan holder will recover at maturity all the invested capital, provided that they keep their money in the plan until its maturity. These pension plans carry a very low risk, although their returns are also lower than those of other similar savings products.
You are advised to take out one type of pension plan or another according to the investor profile you wish to adopt, which will depend, among others factors, on the time remaining until retirement. In your BBVA branch they will explain to you the different options you have for saving for your retirement.