Those affected by covid-19 will be able to rescue the pension plan

People who see their income reduced from the situation caused by COVID-19 may,exceptionally, have some of the money deposited in pension plans. In particular, the unemployed may do so as a result of a temporary employment regulation (ERTE) dossier, employers holding establishments whose opening to the public has been suspended, and self-employed persons who have been forced to cease their activity or those who, incessantly in their activity, have had, in the natural month prior to which the availability of the pension plan is requested , a reduction of at least 75% in your turnover relative to the average turnover of the previous natural semester.

The request for the collection of the pension plan can be made until 14 September 2020 (a period which could be extended), and up to a maximum amount fixed in the standard.

Royal Decree-Law 11/2020of 31 March, with effect from 2 April, allows persons who see their income reduced by the situation caused by COVID-19 to have, exceptionally, some of the money deposited in pension plans.

Moreover, DRL 11/2020 provided that the amount must be credited by pension plan participants applying for the provision of their bound rights, and it was envisaged that, by regulation, the conditions and terms under which bound duties may be implemented could be regulated.

Well, with the publication of the Royal Decree-Law 15/2020,of April 21, which generally entered in force on April 23, where the terms for the rescue of pension funds are laid down,defining, inter alia, the accreditation of the circumstances entitled to the availability of the plans, the period to which those circumstances are linked and the maximum amount available.

Here’s more on what this “rescue” of the Pension Plan is all about:

To whom does it apply?

Pension plan participants may, exceptionally, make their consolidated rights effective in the following cases:

Be in a legal situation of unemployment as a result of a temporary employment regulation (ERTE) dossier arising from the health crisis situation caused by COVID-19.
be businessman holding establishments whose openness to the public has been suspended as a result of containment measures in the field of commercial activity, cultural facilities, establishments and recreational activities, hospitality and catering activities, and additional measures of Royal Decree 463/2020 of 14 March (Article 10), declaring the State of Alarm.
Self-employed (self-employed) workers who had previously been integrated into or in an alternative mutualism regime as such have ceased their activity as a result of the situation of health crisis caused by COVID-19.
Self-employed workers who, incessantly in their activity, have had, in the natural month prior to the one requested for the availability of the pension plan, a reduction of at least 75% in their turnover compared to the average turnover of the previous natural semester.

What is the amount of bound duties available?

The amount of the bound duties shall be that justified by the shareholder to the managing entity,with the maximum limit of less than the following two amounts for the set of pension schemes of which it holds:

1st The result of multiplying the annual Public Multi-Effect Income Indicator (IPREM) by three for 12 payouts in force for the 2020 financial year (6,454 euros X 3 x 19. 362 euros) in the proportion corresponding to the term of the ERTE, the period of suspension of the opening to the public of the establishment or the period of validity of the alarm status , as appropriate. In any case, in all three cases the maximum time period to be computed is the validity of the alarm state plus an additional month. Therefore, the most that could be rescued, if this were the smallest of the two amounts, would be about 1,613.5 euros per month.

2nd The following amount, depending on the assumption in which the participant is located:

For the assumption of unemployment by ERTE, wages no longer received as long as the temporary employment regulation dossier is maintained, with a maximum calculation period equal to the validity of the alarm status plus an additional month, justified by the last payroll prior to the unemployment situation.
For the case of establishment owners whose openness to the public has been suspended, estimated net income that has ceased to be received as long as the suspension of openness to the public is maintained, with a maximum calculation period equal to the validity of the alarm status plus an additional month, justified by the filing of the annual return on Personal Income Tax (IRPF) for the previous financial year and, where appropriate, , the split payment of the IRPF and the VAT self-accuracies for the last quarter.
For the case of self-employed persons who cease their activity or whose turnover has been reduced by 75%, the estimated net income which have ceased to be received during a maximum calculation period equal to the validity of the alarm status plus an additional month, estimated by the IRPF annual declaration for the previous financial year and, where appropriate, the split payment of the IRPF and the VAT self-claims for the last quarter.

In the case of employers or self-employed persons,the shareholder must also provide a responsible declaration quantificating the monthly amount of income reduction.

Who is to apply for this exceptional benefit?

The reimbursement of bound duties shall be effective at the express request of the shareholder,subject to the tax regime established for the benefits of pension schemes. If you have your plan, you must declare the amount you receive in your IRPF.

Benefits in the form of periodic income shall be considered as return on work for the purposes of IRPF, being subject to taxation at 100% of their amount, at the rate corresponding to each beneficiary.

Capital benefits, although in general cases are subject to 100% of their amount, in some cases (benefits corresponding to contributions prior to 31/12/2006) they would benefit from a tax reduction of 40% of their amount. However, it is important to note that this option only allows you to benefit once from the 40% tax reduction, and this reduction cannot be reapplied in subsequent bailouts.

What is the deadline to apply?

Consolidated duties may be made in pension schemes within 6 months from 14 March 2020 (date of entry into force of Royal Decree 463/2020), i.e. until 14 September 2020, which may be extended, taking into account the income needs available in the face of the situation arising from the circumstances of the economic activity caused by COVID-19.

What kind of Pension Plans does this measure apply to?

Participants of:

Individual and associated system pension plans
The pension plans of the employment system:
defined or mixed contribution modality for those defined contribution contingencies.
of the defined or mixed modality of benefits for those defined benefit contingencies, where permitted by the pension commitment and provided for by the plan specifications and under the conditions established by them.
This early rescue will also apply to insured forecast plan (PPA) policyholders, enterprise social security plans (PPSE) and social security mutuals.

How to request this exceptional rescue by COVID-19 and what documentation should be provided?

The amounts mentioned above (revenues no longer received and which represent the maximum amount of benefit that can be requested from the Pension Plan) must be credited to the pension plan managing body by pension plan participants applying for the provision of their consolidated rights.

The circumstances which entitle the benefit shall be established by the pension plan participant by submitting the following documents to the pension fund managing entity:

In the event that it is in a legal situation of unemployment as a result of an ERTE,a certificate of the undertaking in which it is found that the participant has been affected by the ERTE, indicating the effects of the same on the employment relationship for the participant.
In the event that the shareholder is an employer holding establishment whose opening to the public has been suspended, a statement by the shareholder in which the shareholder expresses, under his responsibility,that he meets the conditions laid down in order to be able to make his consolidated rights effective.
In the event that the shareholder is a self-employed person who ceases his activity, a certificate issued by the Tax Agency (AEAT) or the competent body of the Autonomous Community, where appropriate, on the basis of the declaration of cessation of activity declared by the person concerned.
In the event that the shareholder is a self-employed person who has had a reduction of at least 75% of his/her turnover, by means of accounting information justifying the reduction of turnover in the same terms as those established, in Royal Decree-Law 8/2020, to justify the reduction of billing in the extraordinary benefit by cessation of activity or fall of income of self-employed persons affected by the declaration of the alarm status. Self-employed workers who are not required to carry books proving the volume of activity must prove the reduction of turnover by any means of proof admitted in law.

If the participant is unable to provide any of the required documents,he may replace it by means of a responsible statement including the express justification for the reasons,relating to the consequences of the COVID-19 crisis, which prevent him from such a contribution. Upon completion of the alarm status and its extensions, you will have one month to provide the documents you have not provided.

The refund must be made within a maximum period of 7 working days from the time the participant submits the corresponding supporting documentation. In the case of employment pension schemes,this period shall be extended up to 30 working days from the time the participant submits the supporting documentation.