Pension plans face their sixth year with net outflows of money

Pension plans represent the financial vehicle par excellence for accumulating capital for retirement. All administrations wish to promote them as a means to channel private savings into productive investment, and also as a backstop for the first pillar of social welfare: public pensions. However, over the past years, this pillar has been losing relevance.

According to the latest data from Inverco (the industry association), in the first half of 2026, there were €112 million in contributions to individual pension plans. Meanwhile, between January and June, benefits - the money retirees draw upon turning 65 - amounted to €235 million, resulting in €123 million leaving the system. This figure is only half a year and includes only individual plans, excluding corporate contributions and benefits to employment plans.

Yet, the trend is powerful. Since 2021, every fiscal year has registered outflows from the pension plans system, totalling nearly €3.5 billion. Last year, the inclusion of a window for rescuing money that has been in a plan for over 10 years added an additional €1.1 billion in outflows. If the total wealth hasn't dwindled over these years, it's due to the revaluation of the assets where pension plans were already invested.

Individual plans hold €101.849 billion in assets, with an aggregate return of 12% over the past 12 months. Employment plans hold another €41 billion, but updated data is lacking. The turning point for pension plans was paradoxically a law aimed at promoting collective plans over individual ones. The government set an annual contribution cap of €1,500 for the latter, while maintaining the previous cap of €8,000 for employment plans.

As few companies have collective plans for their employees, the direct consequence was significantly less money entering individual plans. Despite the net outflow of money from the system in recent years, there is a slight decrease in payouts. This is explained by the progressive development of simplified pension plans, through two avenues: plans for the self-employed and a new sectoral plan for construction workers.

Pension plan managers have been lobbying the government to raise the €1,500 annual cap and return to previous guidelines. Contributions to pension plans can be tax-deductible, deferring tax payments as they are repaid as income upon withdrawal. Additionally, a portion of the money annually directed to individual pension plans has ended up in investment funds, which have been receiving capital for many years.