What is the difference between pension plan and retirement

Thinking about the future, we all have planned, or at least we wanted, that our pension for retirement is sufficient and worthy after having spent a lifetime working. We can add to this an extra if we hire a pension or retirement plan, two different plans that tend to confuse them but are not the same or have the same advantages. In the following article we clarify the doubts in this regard explaining in detail what is the difference between a pension plan and retirement, so you can benefit when it comes time to stop working and start a new life.

one

In the first place, it is important to be clear that both the retirement plan and the pension plan are complements to the retirement pension, and the amount generated will depend in both cases on the money that is contributed year after year.

two

A retirement plan is an insurance signed with an insurance company and a pension plan is a financial product signed with a bank or an agency.

The pension plan is a contract that is signed to make money contributions in a fund where there are more people, it is a collective contract, managed by a bank or a manager in order to recover them once we retire. The bank can invest that money in other financial products.

For its part, the retirement plan is an insurance that will cover you if the necessary circumstances agreed in the signature with the insurance company are met.

3

The pension plan has more profitability than a retirement plan, because the capital contributed to the first is invested in other financial products of the bank. We can invest it in different ways depending on the type of plan we choose:

• Fixed-income pension plan: the money contributed is invested in corporate bonds or public debt.
• Equity pension plan: the money contributed is invested in shares, with greater risk but also with greater profitability.
• Mixed income pension plan: where part of the capital is dedicated to fixed income and the other part to variable income.

Thus, the retirement plan has less profitability than a pension plan because the money we contribute is not invested in another insurance or product.

4

You will not always be able to recover the money, it depends on what you are hiring. If you hire a pension plan, you will not be able to recover your money until you retire, suffer a serious illness or until you are a long-term unemployed person.

The same thing will happen to you with a retirement plan, hiring one of them called "Plan of anticipated insured (PPA)", in which a significant amount of money is contributed at the beginning and that together with the guaranteed interest rate will be what you recover in When you retire or another of the other two options happens to you. That is the only case in a retirement plan where you will not get the money back when you want, but there are two other types of plans where you can recover it:

• "Individual Plan of Systematic Saving": you will have to contribute a quantity of capital at the beginning but you will be able to recover it from the first moment.
• "Retirement Insurance": you pay a periodic premium as established and you can guarantee a certain amount of money on a certain date, although you can also recover it whenever you want.

5

The tax advantages are different. Depending on what contracts, you can benefit or not from the tax benefits. If you contribute capital to your pension plan, you have tax advantages in the Treasury, you can deduct it from them. But with a retirement plan no, and is that in this case there is no type of tax benefits, except only one of the modalities of this retirement plan that is the "Plan Insured", which is very similar to the pension plan and has its same tax advantages.