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How long do I have to redeem my plan under these circumstances?

For a period of six months from 14 March (when Royal Decree 463/2020 came into force, declaring a state of emergency), participants of pension plans or guaranteed benefit plans (PPAs) may, exceptionally, exercise their vested rights under certain circumstances. The government may extend that period, if the economic conditions so require. The management company must make the repayment within a maximum of seven business days from the participant or insured submitting the relevant supporting documentation.

Under what circumstances could I redeem my plan?

a) When you are legally unemployed due to furloughing (ERTE) as a result of the health crisis triggered by COVID-19.

 

b) When you are the business owner of an establishment which is temporarily forbidden from opening to the public in accordance with the provisions of article 10 of Royal Decree 463/2020.

 

c) In the case of self-employed workers who have previously registered as such in the Social Security system and who have discontinued their activity due to the health crisis triggered by COVID-19.

What is the maximum amount that I can redeem?

The amount of the consolidated rights available will differ in each of the three circumstances below:

 

a) Furlough (ERTE) caused by COVID-19:

 

The unitholder may not receive an amount exceeding the lesser of these two amounts:

  • The net salary which the unitholder or insured party no longer receives while the furlough lasts, with a maximum calculation period which may not exceed the time the state of alarm remains in force plus an additional month.
  • The result of apportioning the annual Public Income Indicator for Multiple Purposes (IPREM) in force in financial year 2020 into twelve payments multiplied by three (€1,613.52 per month) in a proportion corresponding to the furlough's duration. The maximum time period to calculate is the time the state of alarm remains in force plus an additional month(1).

 

 

b) Businessman with a closed establishment:

 

The unitholder may not receive an amount exceeding the lesser of these two amounts:

  • The estimated net income the unitholder or insured party no longer receives due to the establishment they own being closed to the public with a maximum calculation period which is equivalent to the time the state of alarm remains in force plus an additional month.
  • The result of apportioning the annual IPREM in force in financial year 2020 into twelve payments multiplied by three (€1,613.52 per month) in a proportion corresponding to the time the establishment remains closed to the public. The maximum time period to calculate is the time the state of alarm remains in force plus an additional month.

If the unitholder or insured party has redeemed their pension plan for this new exceptional circumstance for liquidity and a further extension of the state of alarm is decreed, the unitholder or insured party may once again seek to redeem their pension plan, guaranteed-benefit plan or company social insurance plan for this reason by applying the aforementioned limit to the state of alarm's new date.

 

 

c) Self-employed worker with cessation of activity

 

The unitholder may not receive an amount exceeding the lesser of these two amounts:

  • The estimated net income no longer received as a consequence of the situation of cessation of activity with a maximum calculation period which is equivalent to the time the state of alarm remains in force plus an additional month.
  • The result of apportioning the annual IPREM in force in financial year 2020 into twelve payments multiplied by three (€1,613.52 per month) in a proportion corresponding to the period of cessation of activity. The maximum time period to calculate is the time the state of alarm remains in force plus an additional month.

If the unitholder or insured party has redeemed their pension plan for this new exceptional circumstance for liquidity and a further extension of the state of alarm is decreed, the unitholder or insured party may once again seek to redeem their pension plan, guaranteed-benefit plan or company social insurance plan for this reason by applying the aforementioned limit to the state of alarm's new date.

 

(1) As at 23/04/2020, the state of alarm's duration was of 56 days (from 14/03/2020 to 9/05/2020). The maximum calculation time would therefore be 86 days.

What documents do I have to provide?

Proof must be provided of the above amounts by all participants or insureds covered by pension and guaranteed benefit plans who submit a request to redeem their vested rights, as applicable in each of the above cases. Therefore, besides the general documents required for the redemption - the request to cash out, form 145 and photocopy of ID card - we will also require:

 

a) Furlough (ERTE) caused by COVID-19:

 

1. Document certifying that the holder is on furlough (ERTE) as a result of COVID-19 and its duration. In this regard, it will be sufficient for the unitholder to submit a certificate issued by the company certifying:

  • That the worker has been placed on furlough as a result of the health crisis caused by COVID-19 and the terms and conditions which apply to said worker's furlough:

- Temporary suspension of employment or working day reduction (specifying the percentage reduction).

  • Last pay slip

 

 This new circumstance for pension plan liquidity has a duration of six months counting from the date the state of alarm was declared (14/03/2020) and the amount redeemed shall be subject to the unitholder or policyholder's income tax as earned income.

 

 

b) Businessman with a closed establishment:

 

1. Sworn statement stating that the applicant is a businessman and the owner of an establishment open to the public which has been closed as a consequence of the provisions set forth in article 10 of Royal Decree 463/2020 of 14 March.  

 

2. Last tax return available depending on their legal form. In other words:

  • Personal Income Tax: Last tax return available:

- Annual: Form 100. Taxable base (box 500/505); and  

- Split payments: e.g. Form 130. Direct estimation of economic activities. Net income (box 03).

  • Company Tax, e.g. Form 200. Profit and loss account result (box 500).

 

3. Last quarter's Value Added Tax self-assessment returns (if available).

 

4. Affidavit of liability by the businessman indicating estimated income not received until 9 May 2020, including said date, when the state of alar.

 

 

c) Self-employed worker with cessation of activity:

 

1. Certificate issued by the State Tax Administration Agency (Agencia Estatal de la Administración Tributaria) or, where appropriate, by the regional authority's competent agency based on the cessation of activity statement declared by the interested party. 

 

2. Last tax return available. Personal Income Tax:

  • Annual: Form 100. Taxable base (box 500/505); and
  • Split payments: e.g. Form 130. Direct estimation of economic activities. Net income (box 03). 

 

3. Last quarter's Value Added Tax self-assessment returns (if available). 

 

4. Affidavit of liability by the businessman on the cessation of activity, indicating estimated income not received until 9 May 2020, including said date, when the state of alarm ends.

Other questions

If the state of emergency continues, can I request a second redemption?

Yes, if the state of emergency is extended, the participant or insured may request a redemption again for this reason. This is capped at the amount of income not received up to the new date of the state of emergency that is declared.

 

What are the tax consequences of a redemption?

The amount that is redeemed by the participant will be subject to income tax like earnings from work, as with any other contingency or exceptional liquidity provisions covered by the current legislation. Consequently, given the exceptional and periodic nature of the regulations, you should assess the advisability of said redemption and its tax impact.

How do I request a redemption of my plan?

You can send the documents directly to our management company Unicorp Vida, to the email address: atencioncliente@unicorpvida.com

 

For further information, you can call or email your account manager or the nearest operational branch. You can find it in our list of branches which remain open

 

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