The Individual Systematic Savings Plans (PIAS) They emerged in 2007 as a product on individual savings insurance. Its objective is to accumulate a sufficient amount of capital over a period of time so that, normally, at the end of retirement, you have a life annuity with which you can supplement your income.
After a decade, at the end of 2017, they managed more than 12,000 million euros, with an increase compared to 2016 of a 19.23 percent, and has 1.64 million insured, 9 percent less than in 2016 according to data from ICEA and UNESPA.
We can ask ourselves: What advantages and disadvantages do PIAS have compared to other financial products?
PIAS financial product in the medium or long term
The Individual Systematic Savings Plans (PIAS) are one of the alternatives with which the medium or long-term savers to get an income supplement.
In principle, these types of products compete with pension plans, pension plans (PPAS), individual long-term savings insurance (SIALP) … but they compete with any type of financial product.
Like any financial product, Individual Systematic Savings Plans (PIAS) have their own characteristics, and like all financial products, they have their advantages and disadvantages.
Flexible contributions and additional insurance
In the PIAS a single initial press, whose amount can vary from 60 to 3,000 euros, depending on the company and the type of product, but after the first contribution allows you to make contributions later that can be monthly, quarterly, semi-annual … depending on who makes the savings contributions.
These contributions have a limitation of 8,000 euros per year and up to a maximum of premiums paid throughout the product up to 240,000 euros.
The PIAS, as it is a product that is considered safe, offers an additional insured capital in the event of the death of the person making the contributions. Insurance savers, in addition to being able to recover the value at the time of the premiums paid, will also be charged an additional amount that is usually between 600 and 1,200 euros.
PIAS are liquid products
It is true that almost all PIAS allow the total or partial redemption of the premiums that have been paid but also what is a large part of this type of products impose minimum periods of permanence, which can be one, two or several years and, above all, that all these products apply penalties that can come in the first years of PIAS registration.
The PIAS guaranteed and free of investment choice, losses can be recorded. In guaranteed PIAS, 100 percent of the capital plus the return is guaranteed, which is usually the case if it is held for 5, 8, 10 or 15 years and when premiums are paid on time.
It should always be taken into account that the management costs and the death coverage premium will be deducted.
PIAS serve to diversify savings
A few years ago, only guaranteed PIAS were marketed to the most conservative savers. Currently, these savers continue to exist, their guaranteed interest rates are between 1 or 2.3 percent, which can be reviewed quarterly or semi-annually, and offer loyalty rewards of 3 or 5 percent after the product has been in existence for 10 years.
Lately, the PIAS not guaranteed They have become fashionable, which are those products that link their profitability to the performance of a basket of investment funds. Companies offer to choose (conservative, moderate, dynamic, prudent, determined, global …) and depending on the risk assumed, they can choose a type of PIAS.
Trading companies often warn in their brochures that unsecured PIAS are only aimed at customers who want to take the risk of a possible loss in the investment, since the capital will depend on the value of the fluctuation of the contributions and, therefore, will be exposed to the financial market.
Past returns, those shown to sell the PIAS associated with funds, are not a guarantee of future returns.
The Commissions that are paid in the PIAS
PIAS usually have entry fees, exit fees, risk fees, management fees, brokerage fees …
All these commissions make it difficult, especially in those that are free investment PIAS but also in guaranteed PIAS, the comparison between one and the other, as there is no reference interest rate.
PIAS only have special taxation with the life annuity
The contributions of the PIAS or the payment of the premiums that are made rents do not decrease of the saver within personal income tax, a tax advantage of which if they have pension plans or PPAS.
If a total or partial redemption of the PIAS is made before the 5 years have passed from the first contribution, taxes will be paid for the interests received. At present, up to 6,000 euros is 19 percent, between 6,000 to 50,000 euros, it goes to 21 percent, and from 50,000 euros it reaches 23 percent.
If more than 5 years have passed since the first contribution, the PIAS is redeemed and with the contributions a life annuity is constituted, the tax advantages appear, if the life annuity is not constituted, it will be taxed as a redemption less than 5 years.
Depending on the age of the saver, they will charge more or less discounts on the amount of interest to be taxed. If the saver is between 50 and 59 years old, 28 percent of his interest will be included in his personal income tax, if he is between 60 and 65 years old, it will be 24 percent, and the person over 70 years of age will be taxed at 8 percent of interest.
Currently, Hacienda it is not so generous with any other financial product for savers over 65, which makes this type of product more attractive. When constituting a life annuity they have a deduction of up to 92 percent of the benefits obtained.
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