Pension and Welfare Retirement Plans

• How should I choose my pension plan?

• BASED ON YOUR AGE
  

  The investment strategy of a pension plan should be adapted to your needs based on the time remaining until your retirement. To save, using the same pension plan until your retirement, you can use the My Sustainable Santander Project range.

  This range of pension plans uses a life-cycle strategy.
  This means that each plan has an initial risk level based on age and the investment time until retirement.
  Over time, the exposure to risky assets is reduced and fixed income investment is increased.

  BASED ON THE RISK YOU WANT TO TAKE

  If you want to choose a pension plan based on the risks you are willing to take you can consider the My Santander Plan range.

  You just have to decide between three levels of risk.
  Based on this, a team of experts will invest your savings in varying percentages of fixed and variable income, according to what you have chosen.

  BASED ON WHAT YOU WANT FOR YOUR RETIREMENT

  With the Plan Simulator, discover how much you need to contribute each month to achieve the income you want in your retirement.

  By answering 5 questions, you will know how much you need to save each month so that your retirement income is what you envision and what the tax savings will be until your retirement.
  

  WITH A GUARANTEED MINIMUM

  If you want to have a guaranteed minimum interest that does not depend on market fluctuations, your best option are Insured Retirement Plan¹.

  An Insured Retirement Plans (IRP) is a savings insurance, and as it guarantees a minimum return it will be the most suitable for you if you have a conservative profile.

• How are pension plans taxed?

• Contributions made to pension plans are directly deductible from your taxable income for the purposes of Spanish income tax (IRPF). These contributions are subject to an annual limit:

  • For the holder, either €1,500 or 30% of net income (from both employment and economic activities), whichever is lower. This amount may be increased by €8,500 when it is derived from employer contributions or employee contributions to the same social welfare instrument for an amount equal or less than the amounts resulting from the following chart, according to annual employer contributions:

  Annual contribution	Rate	Example of contribution
  Equal or less than €500	2,5	For employer contributions of €500, an employee can contribute up to an additional €1,250.   In this example the annual contribution would be €1,750, regardless of what is contributed to personal plans.
  Between €500,000 and €1,500	€1,250, plus the result of multiplying by 0.25 the difference between the employer contribution and €500	For employer contributions of €1,500, an employee can contribute up to an additional €1,500. In this example the annual contribution would be €3,000, regardless of what is contributed to personal plans.
  More than € 1.500	1	For employer contributions of €2,000, an employee can contribute up to an additional €2,000. In this example the annual contribution would be €4,000, regardless of what is contributed to personal plans.

   
  However, coefficient 1 shall apply when an employee receives a yearly gross income greater than €60,000 derived from work for the employer making the contribution, who must inform the entity managing or insuring the pension plan.

  • For freelance workers, in addition to the individual limit of up to €1,500, there is a contribution and deduction limit for their contributions to the new Simplified Employee Pension (SEP) plans of €4,250. If you are self-employed, contributions are therefore limited to €5,750, which is the result of adding individual and employment plans.
  • Limits to contributions for the benefit of the spouse, provided the spouse earns, both from work and economic activities, less than €8,000 per year, are set at €1,000 per year. These contributions are not subject to inheritance nor gift tax.
  • Persons with a disability are subject to an annual contribution limit of €24,250, including personal contributions. In the case of contributions to pension plans for the benefit of persons with a disability with whom there is a kinship or guardianship relationship, the limit is €10,000.

  If these limits are exceeded, the excess can be carried over to reduce the taxable income along the following five years, subject to the same limits.

  Furthermore, this is a tax benefit you'll never lose. After retirement, we can continue to contribute to the pension plan and deduct those contributions, as long as certain requirements are met.

  Up to 40% of the amount received in the form of capital can be deducted for contributions made prior to 2007 under certain conditions and depending on the contingency. An application period has been set to request said reduction according to the retirement date.

  Transfers can be made between pension plans without being subject to taxation.

  This tax regime is applicable to the common Spanish territory. In the regions of Navarre and the Basque Country, their own tax regime in force at the time is applicable.

  All of the above is informative regarding the taxation regime in force as of 1 January 2023 and does not constitute tax advice.

• How can I make a redemption from a pension plan?

• Pension plans can only be rescued in certain contingencies and assumptions, since the objective of the savings invested in these products is to save for retirement:

  • If you have retired.
  • If you suffer a total, absolute permanent disability and high disability.
  • If you pass away.
  • If you have severe dependency or high dependency.
  • If you or an immediate relative suffers a serious illness.
  • If you are long-term unemployed.

• What other benefits do pension plans offer?

• SECURITY

  A reliable investment alternative.

  Clients and their contracted products are protected by the General Directorate of Insurance and Pension Funds (Dirección General de Seguros y Fondos de Pensiones - DGSFP), the public body that supervises pension plans.

  In addition, the management company carries out management and risk control on a daily basis, issuing a periodic management report.

  TRANSPARENCY

  Right from the beginning you will have all the necessary information in the Fundamental Data for the Investor document, the product file, the Scheme Specifications and the financial reports of the pension funds. In these documents you will find all the information you need to clearly and easily understand the pension plan in which you will invest your assets.

  PLANNING

  With pension schemes you can plan a long-term savings strategy, establishing a periodic contribution plan to help you save small amounts little by little, more comfortably than once a year with a much higher amount.

  DIVERSIFICATION

  All product categories have different investment objectives. This allows us to diversify our savings and choose the one that best suits our needs:

  • Life cycle pension plans that automatically adjust investments based on our age.
  • Profiled pension plans that offer us a diversified investment based on our risk profile.

  PROFESSIONAL MANAGEMENT

  A large team of professionals makes the appropriate decisions in line with the investment policy of each plan, following the established risk criteria. Our highly qualified investment manager is Santander Pensiones (http://www.santanderassetmanagement.es).

  The capital of the pension plans and the EPSVs' provision plans are exposed to fluctuations in market prices and other variables, and therefore the recovery of the initial capital invested cannot be guaranteed.
  
  

FAQs about Welfare Retirement Plans

• What are EPSVs?

• Voluntary Social Welfare Entities (EPSVs) are a type of legal entity in the Basque Country which provide a voluntary retirement-savings platform for their members through Welfare Retirement Plans.
  
  EPSVs and, therefore, welfare retirement plans are controlled and overseen by the Basque Government.
  
  You can choose an EPSV welfare retirement plan based on the following criteria:
  

  • Based on your age: choose welfare retirement plans that follow the life cycle strategy, i.e. plans which reduce the investment risk as the retirement age approaches, such as the Mi Proyecto Santander Sostenible range.
  • Based on the risk that you would like to assume: there are welfare retirement plans that combine various fixed and/or equity assets as a way of diversifying your investment. Therefore, you simply need to choose how much risk you would like to assume and a team of experts will then select the assets. For the Mi Plan Santander there are three risk levels.
  • Based on the asset type: if you would like to save for your retirement using welfare plans that mainly invest in a specific asset type, you can do that too. Discover our fixed and equity plans.

• How are welfare retirement plans taxed?

• Contributions made to welfare retirement plans are directly deductible from your taxable income for the purposes of income tax (Spanish IRPF). These contributions are subject to an annual limit:

  • For members, the deductible limit is €5,000 for their own contributions, of €8,000 for employer contributions, with a joint limit of €12,000.
  • Contributions of members for the benefit of their spouse, provided the spouse receives a taxable income under €8,000 per year, are subject to a limit of €2,400 per year. These contributions are not subject to inheritance nor gift tax.
  • For persons with a disability, the annual limit is €24,250, including personal contributions. In the case of contributions to pension plans for the benefit of persons with a disability with whom there is a kinship or guardianship relationship, the limit is €8,000.

• If these limits are exceeded, the excess can be carried over to deduct the taxable income along the following five years, subject to the same limits.

  Once retirement has been reached, these deductions are not applicable from the tax period following retirement.

  Generally speaking, benefits can be redeemed in the form of capital (in one lump sump) or instalments (selecting the amount or term); they are fully subject to income tax as if they were income from employment.
  

  • If they are received in the form of capital (in one lump sum), there will be a 40% deduction on them, with a maximum of up to €300,000 for the first payment.
  • If they are received in the form of instalments, they are fully subject to tax.

• Transfers can be made between welfare retirement plans without being subject to taxation under certain conditions.
  
  This taxation applies to the Basque territory.
  
  All of the above is informative regarding the taxation regime in force as of 1 January 2023 and does not constitute tax advice.

• How can you redeem a welfare retirement plan?

• Welfare retirement plans can only be redeemed in specific circumstances and eventualities, as the saving invested in these products is intended for saving for the holder's retirement:

  • If you have retired.
  • If you suffer a total permanent disability, an absolute disability and a severe disability.
  • If you die.
  • If you have a severe or great dependency.
  • If you or your immediate family suffers a serious illness.
  • If you are unemployed long term.

• Holders of individual EPSVs can generally redeem their redeem their accrued benefits from the 10th year after they pay their first contribution into a EPSV.
  

Pension plans:
Management Company: Santander Pensiones, S.A. EGFP; Depository Institution: Caceis Bank Spain, S.A.; Promoter: Banco Santander, S.A. The KIID (Key Investor Information Document), as well as all the detailed information on Sustainability, is available for you to see at www.santanderassetmanagement.es. Pension plans are products that depend on fluctuations in market prices and other variables. Accordingly, they do not guarantee any return.

EPSV:
Management Company: Santander Pensiones, S.A. EGFP; Depository Institution: Caceis Bank Spain, S.A.; Promoter: Banco Santander, S.A.
The Preliminary Information Document (PID) for EPSV pension plans are available for you to see at www.bancosantander.es and www.santanderassetmanagement.es. The performance of pension plans depends on fluctuations in market prices. The equity of EPSV pension plans are exposed to fluctuations in market prices and other variables. Therefore, the value of assets may rise or fall, making it impossible to guarantee the return of the initial capital invested, and other variables, meaning that the plan is unable to guarantee any return.

1. Mobilizations and rescues in the event of long-term unemployment and serious illness are carried out at the market value of the investments concerned.