A pension fund (or social security fund) is a tool that allows you to set aside a small capital to have one highest pension In the future, a pension that can also be destined for someone chosen (like the spouse). The sums put aside in the pension fund should ideally be taken at the time of retirement but it is possible to ask for some advances or redemptions To cope with important expenses such as buying or renovating home, dealing with periods of work difficulties or medical expenses.
How a pension fund works
The pension fund It is based on the capitalization system: the contributions paid are accumulated in an individual account in the name of the help, on which the yields accrued over time are added. Every person who adheres is part of their money in this fund, which we can imagine as a container in which actions and bonds are collected. The composition of these investments will be more or less prudent depending on How old are missing at the pensionwhen the accumulated sums can be taken.
Also, every year it is possible deduce from tax income of up to 5 164.57 euros of the contributions paidthus reducing the Irpef to be paid and obtaining tax savings. Anyone can decide to join a pension fund and choose whether to do it in a formula Pactherefore by paying a pre -established amount every month/quarter/semester, or in formula Pic, putting an amount always different to irregular deadlines.
Finally, if you work in a company, you can also bring together the TFR. Often are the companies themselves propose a pension fund for employees, But adhesion is free, and you can also choose a fund other than the proposed one. Choosing a social security fund is not irreversible: already after two years you can also decide to move the capital set aside in another pension fund.
The advances on the pension fund
Let’s see schematically how you can request some advances on the pension fundfor what and paying how many taxes on the sum requested:
Advances:
Extraordinary healthcare costs (for itself, the spouse or children):
When: at any time;
How much: up to 75% of the accumulated capital;
Taxation: between 15% and 9% (depending on the years of participation).
Purchase and renovation first home (for themselves or children):
When: after 8 years of membership;
How much: up to 75% of the accumulated capital;
Taxation: 23%.
Personal and family reasons:
When: after 8 years of membership;
How much: up to 30% of the accumulated capital;
Taxation: 23%.
The advances can be repeated over the yearsbut without exceeding the maximum limit that can be paid. There is also the possibility to ask for the “redemption”that is, the entire amount accumulated in the pension fund, usually for reasons related to early retirement or particular circumstances.
Retales:
Permanent disability, unemployment of more than 48 months, resignation, dismissal, death of the acting:
When: at any time;
How much: all the sum accumulated;
Taxation: 23% for resignation and dismissal; 15% – 9% for other cases (based on the years of participation).
Unemployment between 12 and 48 months, layoffs:
When: at any time;
How much: up to 50% of the accumulated sum;
Taxation: 15% – 9% (depending on the years of participation).
As an alternative to redemption you can request a Temporary early incoming income“Rita“, Which allows you to withdraw the capital accumulated in the fund through scaglied annuities until the retirement age is reached, to remedy the absence of a salary over time that is missing upon reaching the requirements to have the state pension. You can take advantage of the Rita as long as they lack less than 5 years at the pension, that there has been a pension fund for at least 5 years and that there is a termination of work.
Tax advantages
When the time of the pension comes, you can choose to receive the sum set aside in the pension fund in a single solution (capital) or installs (income). The fact of having used a social security fund involves the right to pay less taxes every year, and the earnings of the fund are taxed less than other investments. The tax advantages are significant: the contributions paid are deductible from taxes up to 5,164.57 euros per year, so the tax base For the calculation of the taxes (in practice the sum on which the taxes are paid is lower), and in addition, the capital accumulated within the fund will be taxed with a subsidized rate that varies between 15% and 9%, based on the years of adhesion to the pension fund (in fact only the part relating to the contributions that have been deducted every year and the fees of TFR paid is taxed).
Let’s take an example of the tax advantage, taking into account a certain approximation in calculations due to the lack of information such as the municipal additional and the reference region: Marco earns 30,000 euros per year and pays 200 euros every month in his pension fund, for a total of 2,400 euros per year. This amount is deductibleThat is, it is removed from income before calculating taxes. Without the pension fundits taxable income is 30 000 euros, with an average taxation of 18.3%so it would pay 5 490 euros of taxes. With the pension fund, the taxable income is reduced to 27 600 euros (30 000 – 2 400). Consequently, its average taxation drops to 16.8%and will pay 4 630 euros of taxes. So Marco saved 860 euros of taxes And, at the same time, he put aside 2 400 euros for pension.
The pension fund is a good solution for Save for the futurehave one highest pension And face economic unexpected eventsall crowned with unique tax advantages; however it remains important to consult the “Cost card” in the document “Key information for the member” which is delivered at the time of adherence to each pension fund, to evaluate the costs that are incurred for management well. Certainly getting advice from financial professionals would be the most suitable solution to evaluate your situation and quantify the advantage you can get.
