the main differences – Generali Tranquility

It is common to confuse Pension Funds with Pension Savings Plans (PPR). Both, in fact, have a common goal for those who hire them: to secure a good fund, which guarantees a comfortable life during retirement.

However, knowing the difference between these two investment products will help you choose the one that best suits your profile and your expectations for the future.

Before contracting a Pension Fund or a PPR, find out about all the tax, availability and profitability advantages.

Pension Fund or PPR? What are the differences?

If you want to know the differences between these two products, you have found the right article! Here we explain what they are, how they work and the advantages and disadvantages of each of them, so you can make a good decision if you want to choose between one or the other.

Pension fund

A pension fund is an investment instrument that aims for long-term profitability. This is a collective agreement with which the person who joins the plan pays an amount periodically (monthly or annually) to a fund. When the time comes to redeem the Pension Fund, the beneficiary will be entitled to the full amount generated (subject to some conditions, mentioned below).

How a Pension Fund works

A pension fund works very similarly to an investment fund. The capital that the person allocates is added to that of other people and is invested by a group of experts in various assets, with the aim of generating greater profits for the contractors.

The great advantage of this type of investment is the fact that it uses investments that are subsequently reinvested over very long periods, which can allow exponential growth in profits over time.

This means this a pension fund is always a long-term product.

Who can contribute to a Pension Fund?

A private investor can only contribute Open pension fundswhich allow private memberships through the purchase of Participation Units. These funds are usually managed by institutions authorized for this purpose (banks, insurance companies or investment fund managers).

Already the Closed pension funds They are normally established by a specific entity, for example a company or a professional association, and are intended exclusively for its employees or members.

What are the tax advantages of Pension Funds?

One of the great attractions of this type of investment is this the sums invested can be declared to the IRS, giving the right to tax benefits.

How can I withdraw my money from a pension fund?

Moving or redeeming a Pension Fund it is more restrictive than a PPR. Repayment from the Pension Fund occurs upon retirement (for age limits, disability, early retirement and early retirement). Despite this, early repayment is possible in the following situations:

• Long-term unemployment;
• Permanent incapacity for work;
• Death.

📢 Don’t forget: When redeeming the Pension Fund, at least two thirds of the accumulated capital is received in the form of an annuity (supplement to the monthly income) and only one third can be redeemed in full.

What are the risks associated with Pension Funds?

Pension funds invest in different types of assets (shares, bonds, investment funds, real estate, etc.), subject to market fluctuations. Meaning what, there is always the risk of loss associated.