New limits for 2021 pension plans

What has happened?

Law 11/2020, of December 30, on General State Budgets (PGE) has modified the maximum limits of contributions to complementary social security systems and their reduction in the tax base of the Personal Income Tax (hereinafter, IRPF).

How are the new limits of contributions and the applicable tax reduction?

As of financial year 2021, the maximum limit of contributions to supplementary social security systems is established in the amount of 2,000 euros per year. However, you can reach up to 10,000 euros per year, if the difference (8,000 euros) comes from business contributions.

Likewise, as a reduction limit in the taxable income of Personal Income Tax, the following amounts are set:

    • 2,000 euros per year, or 30% of the sum of the net income from work or income from economic activities received individually in the year, if it is a lower amount.

In the same way, it can be reduced up to 10,000 euros per year, if the difference (8,000 euros) comes from business contributions. For this purpose, those carried out by individual entrepreneurs or self-employed workers will be considered business contributions.

    • In addition to the above, 1,000 euros more for contributions in favour of the spouse if he or she, has an income of less than 8,000 euros.

Both the contribution limit and the tax reduction are applied jointly for all contributions to pension plans of any system (PPI and PPE), mutual societies (MPS), insured pension plans (PPA), and business social security plans. (PPSSE).

How does it affect if you are a mutualist or participant of Loreto Mutua?

Since January 2021, the maximum amount that you can contribute individually to the Mutual Fund and to our pension plans, Loreto Óptima PPI and Loreto Empresas PPE, has been limited to 2,000 euros per year.

However, for Loreto Mutua MPS Mutual Fund and Loreto Empresas, PPE, this amount may be increased by an additional 8,000 euros, that is, up to 10,000 euros per year, if the excess comes from contributions made in your favour by the protective company, in case of the Mutuality, or by the promoter company, in the case of the PPE.

As they are joint limits for several products, if throughout a year you exceed the limit set (2,000 or 10,000 euros), you must request their withdrawal before June 30 of the following year, otherwise, it could lead to an administrative sanction. 

For our side, in the event that there is an excess of the legal limit of contributions to our products, we will proceed to make the return of said excess, without the need for a request, if the excess occurs in your individual contributions. If the excess is produced with the contributions made by the protective company, and correspond to contributions in favour of the worker, they will have to make you the regularization in your payroll.

How can we help you?

To avoid exceeding the limit, we have enabled a form for modifying contributions to Loreto Óptima PPI, which you can access in the “Procedures” section of your private area. If you make contributions to the Mutual Fund individually, through receipts that we pass on to the bank, you can send us an email to info@loretomutua.com in case you want to modify the monthly contribution.

If you are a mutual member or participant of Loreto Empresas PPE and you have questions regarding business contributions, please contact your company in advance, since the information we have is limited.

However, for any clarification we are at your disposal at info@loretomutua.com or by calling 900 844855 and 91 7589650. Likewise, for information in person at our offices at Paseo de la Castellana, 40 – 1st floor, it will be necessary to obtain by appointment.

Additional Information

You can also find out at www.loretoinversiones.com about the investment funds offered by Loreto Inversiones SGIIC, SAU, belonging to the Loreto Mutua Group.