How to Withdraw Money from Your Pension Plan in 2025? Requirements, Taxes, and Key Considerations

In 2025, you can withdraw contributions older than 10 years without justifying a cause. We explain the 10-year rule, how much you can withdraw, the tax implications, and how to do it step by step with practical examples.

Welcome to 2025. You can now withdraw your money from your pension plan! We tell you why some savers are not being able to withdraw their savings as promised.

1. Let's Understand the Context

One of the most commonly heard reasons why pension plans haven't gained mass adoption in Spain has been the obstacles savers faced when trying to access their savings.

However, despite the fact that illiquidity has its advantages, as explained in this article, 2025 looks like a promising year with greater adoption expected for this savings product.

The big news is that there no longer needs to be a specific cause to withdraw the money, as was traditionally required (retirement, long-term unemployment, or permanent disability). Now, it's simply enough that a certain period of time has elapsed since the contributions were made, specifically 10 years.

Since the publication in the Official State Gazette of Royal Decree 62/2018, of February 9, approving the Pension Plans and Funds Regulations, many savers have eagerly awaited its entry into force. They can now access what are known as consolidated rights corresponding to contributions more than ten years old.

2. Can I Withdraw All the Money in My Plan?

There is no limit on the amount that can be withdrawn. This means that, for withdrawals based on the 10-year time period, there is no need to justify any situation or provide documentation, as the age of the units grants the right to withdraw and the pension fund must facilitate the process for the saver.

But if the money was contributed within the last 10 years, then you'll need to wait for that period to elapse. In the meantime, the money will remain invested according to the pension plan's policy, and all contributions you make won't count as employment income.

3. How Does the 10-Year Rule Work Exactly?

The contributions we're talking about are those that can be withdrawn once a 10-year window has passed. Having come into effect on January 1, 2025, any contribution made before January 1, 2016 will be available.

However, this possibility also applies to later contributions, which means any new contribution must remain in the pension plan for 10 years and, once that period is met, it can be accessed.

Let's look at an example:

If you contributed €1,000 per year from 2010 to 2024 (inclusive), in 2025 you'll be able to withdraw everything you contributed from 2010 to 2015 (i.e., the units that have already reached 10 years). But you won't just recover the €1,000 from each year—you'll get all the units from those years at their current price. This includes any appreciation they've had (or loss, if their value has dropped).

How to Properly Understand "Current Value" or "Returns"?

Imagine that every time you put money into your pension plan, you're buying "tokens" of a fund that change price daily (this price is called the "net asset value"). For example, if each token is worth €10 and you contribute €100, you'll buy 10 tokens. If after 10 years each token is worth €20, your same 10 tokens are now worth €200.

The important thing is:

• What you actually withdraw after 10 years are those tokens or units
• You withdraw them at their current price, not at the price you bought them

That's why, when we say you're withdrawing "the €5,000 you contributed" plus the return, you're actually withdrawing your units at a price that may be higher or lower than the purchase price.

Let's recap:

• The "block" of units you purchased in a given year becomes available after 10 years.
• If you decided to withdraw at that point, you'd take out whatever those units are worth at that moment.
• If the unit price has risen, you'd have profits (positive returns).
• If the price is lower than when you bought, you'd have losses (negative returns).

With this idea in mind, it's easier to understand that it's not isolated money you put in in 2010 and kept "under the mattress": these are invested units whose value can fluctuate. When the time comes (after 10 years), you can redeem those same units and take whatever they're worth at that moment. Let's look at a couple more dates:

• On June 1, 2027, you'll be able to withdraw all units you purchased before June 1, 2017.
• On April 23, 2035, all units you purchased before April 23, 2025 will be available.

GOOD TO KNOW: To know what savings you'll be able to withdraw, we need to understand how a pension fund works. It can be explained quickly: when we make contributions to a plan, we're buying units of that fund at a specific price (called the net asset value). The units will vary in price over time as a result of the investments the pension plan follows. Therefore, after those 10 years you'll be able to withdraw those same units at their new net asset value—you get the same units but at the new market price. The price variation is what we commonly know as returns and depends on how "well or poorly" the pension plan has performed.

In principle, a pension plan shouldn't charge you to withdraw the money, but we always recommend reading the fine print of the commercial contract in case it might not be so. In any case, transfers between pension plans have no cost for the saver and you can always move the plan to a new provider that doesn't charge withdrawal fees.

4. What Taxes Do I Have to Pay When Withdrawing from My Pension Plan?

The taxation for individuals does not depend on the reason for withdrawing the money.

That is, when the money is accessed, it will still be considered employment income subject to income tax. You can find more information in the taxation section of our pension plan guide.

5. So, Can I Withdraw Money from My Employment Pension Plan?

It's important to know that not all company pension plans currently allow employees to withdraw money. Employment plans have a particularity, as the Control Committee must explicitly approve it and, furthermore, it must be included in the plan specifications, so it's advisable to check or ask your plan manager beforehand.

Watch out! When working with a compensation and benefits consultancy, this is done to resolve the potential complexity of launching an employment pension plan and thus require their help. It is by no means necessary, and there are legal formats, such as jointly promoted employment plans, that allow any company to offer a pension plan easily. Additionally, banks and insurers work with these consulting providers with the aim of capturing the largest amount of money or even making it harder to withdraw.

At Arca, we've changed all this and more. Welcome to the easiest way to open and manage an employment pension plan.

Schedule a free demo now and we'll show you how to start offering employment pension plans to your team. Plus, thanks to our work with the best payroll software and accounting firms, you can optimize your team's compensation without it being any burden for you.

It's never been easier to offer your own employee savings system. Start now with Arca!