Transferring an insurance policy or mutual society to a pension plan

Which savings products (Insured Pension Plan, mutual societies, life-savings insurance, PIAS) can be transferred to a pension plan and which ones have fine print.

One of the most frequent questions we receive at Arca Digital comes from professionals who, years ago, took out a retirement product and now want to move their money to more profitable options with lower fees.

People often arrive with documents bearing confusing names like Personalised Provision System or Whole Life Retirement Insurance, thinking they are traditional pension plans. However, the ability to transfer that money (and to do so without paying tax along the way) depends entirely on the nature of the product you signed.

In this article, we shed light on which products can be transferred and which ones have fine print.

1. The ideal scenario: Pension Plans and Insured Pension Plans

If you have an Individual Pension Plan (PPI), an Employment Pension Plan (PPE) or an Insured Pension Plan, you're in luck. Spanish law allows the total or partial mobilisation of consolidated rights to another pension plan at any time, meaning the money you have accumulated.

This movement is exempt from taxation: the tax authority will not charge you taxes for switching providers in search of better returns.

2. The labyrinth of Mutual Societies

Many professionals (architects, doctors, lawyers…) have their money in Personalised Provision Systems. Here, the right to transfer your money depends on how you are using that mutual society:

• If it is your alternative to RETA (Self-employed): the regulations establish that, if it is your alternative system to the Special Regime for Self-Employed Workers of the Social Security (RETA), the law prohibits transferring those funds to a private pension plan while you remain active.
• If it is supplementary savings: sometimes, the mutual society's records indicate that you do not maintain the amounts or coverage required to practice as self-employed. In other words, you use the product as an extra. In this case, tax law does allow the transfer, but you will face the mutual society's own regulations. As individual capitalisation systems, many entities protect their contracts and do not allow exits to other entities until retirement.

3. Life-Savings Insurance and similar products from insurers

Another very common case is that of disguised insurance policies. Many people believe they have a pension plan when in reality they signed a "Whole Life Retirement Insurance" or a "Combined Savings and Provision Plan".

Although the policyholder acknowledges that the primary purpose of the insurance is to guarantee supplementary income in case of retirement, technically it is a life insurance. These products accumulate a guaranteed surrender value that can be accessed before or after retirement.

Can they be transferred? It depends! Insured Pension Plans can, but sometimes the terminology used by the product provider is not entirely clear. If it is another type of life insurance, the way to get your money out is to request the surrender of the policy. When you surrender it, the money goes through your bank account and you will have to pay personal income tax on the returns (profits) generated over the years. Once the taxes are paid, you are free to reinvest the net capital in a pension plan with better fees.

In summary: don't be left in doubt

The financial sector has created an ecosystem of products —PIAS, Unit Linked, SPP or Retirement Insurance— whose exit rules are buried in dozens of pages of general terms and conditions. The fear of making mistakes or suffering penalties means many savers leave their money stuck in products with low returns and high fees.

Not sure what type of product you have? At Arca Digital we help you

You don't need to wrestle with the legal terminology of your policies. Send us the statement of your product and we will check for free and without obligation whether you can recover your money and transfer it to a more efficient pension plan, with better returns and lower fees.

Click here and check it completely free of charge.