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Advantages of Group Retirement Plans

  • Extensive covers The Group Retirement Plan offers extensive covers for managers and other insured employees. In the event of retirement, disability or dependency, the beneficiaries are the insured individuals themselves and, in the event of death, the individuals they designate.
  • Loyalty of managers and strategic employees The Group Retirement Plan enables you to offer a specific group of employees specific protection and hence demonstrate your concern for the safety and well-being of your managers and employees, as well as for their families.
  • Flexible It can be adapted to the needs of each company and include contributions from the company alone or from both the company and employees. 

Flexibility

Group pension plans are very flexible and can be adapted to the needs of each company and include contributions from the company alone or from both the company and employees. The group retirement plan enables companies to offer a specific group of employees specific protection for retirement, disability, dependency and death.

 

 The Group Retirement Plan is unit-linked life/savings insurance offering various investment options, among which we highlight the lifecycle model, which invests in two asset portfolios to create a lifecycle scheme whose time horizon is linked to the estimated date of retirement. Under such schemes, each employee is assigned a specific asset distribution according to their age in which proceeds are invested according to the years remaining until the retirement date. The investment strategy becomes more and more prudent, with the percentage of equities being reduced in favour of bonds as the estimated retirement date draws closer.

Covers offered by Group Retirement Plans

Retirement

Total, permanent and major disability

Death

Severe or major dependency

Taxation

  • For the employer The tax deduction is deferred until the employee/manager receives the benefit. At that time, the company can deduct the full amount of the premiums paid for corporate tax purposes.
  • For the employee² Taxation is deferred until the time of receipt of the benefit. At that time, if the contingency is due to retirement or disability, the benefit is taxed as income from work under personal income tax, and in the event of death the beneficiary or beneficiaries will be subject to the inheritance and gift tax. 
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How can an employee collect benefits from a group retirement plan (GRP)?

The forms of payment and recognition of the right to receive benefits from the group retirement plan owing to the aforementioned contingencies, may be:

  • Benefit as a capital sum, in the form of a lump-sum payment. A beneficiary may receive only one benefit under this plan in relation to any one contingency.
  • Benefit in the form of an annuity, and only for retirement contingencies. This consists of the receipt of two or more successive payments at regular intervals, including at least one payment each year of a constant or variable amount.
  • Mixed benefits combining annuities of any type with a capital sum payment, as stipulated in the preceding paragraphs. 
How are contributions to a group retirement plan taxed?

For the company, the contributions it makes as policyholder on behalf of its employees (insured individuals) are not deductible for corporate income tax purposes until benefits are paid.

For employees, contributions will not be included in their personal income taxable base, thereby reducing the withholding rate and deferring taxation until benefits are paid. 

How are benefits in a group pension plan (GPP) taxed?

The benefit received by the employee is taxed as employment income for personal income tax, and in the event of death the beneficiary/s will be liable for inheritance and gift tax. 

In the event of death, is an additional capital sum available in addition to the contract balance from a group retirement plan?

In the event of death before retirement, the beneficiaries would receive a benefit equal to the accumulated balance in the plan on the date of death plus the additional capital sum set out in the policy. 

What contingencies are covered by a group retirement plan?

They cover the contingencies of retirement, total permanent or major disability, severe disability, severe or major dependency and death, as well as exceptional liquidity situations arising from serious illness or long-term unemployment. 

Have any other questions?

Employer pension plans (EPPs) could be a great option. They will help your employees supplement their public pension. Learn more
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Under this type of insurance, the insurer will not assume any interest rate risk, whether financial or investment credit risk, as this risk will be borne entirely by the policyholder and the policy’s insured person. The value of the mathematical formula will always be subject to financial market fluctuations that are beyond the control of the insurer and whose historical results are not indicative of future results, and on the ability of the counterparty to meet its obligations (credit risk). A loss scenario with no minimum value may also occur. A risk of total or partial loss of the investment is therefore present.

1. Commitments arising from legal or contractual obligations of the company with its employees, as set out in a collective bargaining agreement or equivalent provision, which are aimed at making contributions linked to the contingencies set out in the regulations governing pension plans and funds, are considered in this regard. For the establishment of these commitments, an employment relationship within the enforcement scope of the Workers’ Statute must exist, and the employment relationship must be in Spain and subject to Spanish law.

2. The requirements and limits set out in current tax legislation must be complied with.

Products can only be taken out by residents of Spain.

 

Covers and services subject to the policy’s terms, conditions, limitations and exclusions as set out in the terms and conditions and schedule.

Insurance brokered by BanSabadell Mediación, Operador de Banca-Seguros Vinculado del Grupo Banco Sabadell, S.A., holder of Tax ID No. A-03424223, with registered office at Av. Óscar Esplá, 37, 03007 in Alicante, and registered in the Alicante Companies Register and in the Administrative Register of Insurance and Reinsurance Distributors of the Directorate-General of Insurance and Pension Funds (DGSFP) under code OV-0004, having taken out a liability insurance policy pursuant to prevailing regulations on private insurance and reinsurance distribution. You can view the insurance companies with which BanSabadell Mediación has entered into an insurance agency contract on the website www.bancosabadell.com/bsmediacion

The Group Retirement Plan is a life/savings policy of BanSabadell Vida, Sociedad Anónima de Seguros y Reaseguros, subject to the terms and conditions stated in the policy, holder of Tax ID No. A08371908 and with registered office at Calle Isabel Colbrand, 22, 28050 Madrid. Registered in the Madrid Companies Register and in the Insurance Entities Register of the Directorate-General of Insurance and Pension Funds (DGSFP) under code C-0557.