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Practical manual for Income Tax 2021.

4. Contributions to corporate social security plans

Contributions made by workers to company social security plans regulated in the first Additional Provision of the consolidated text of the Law on the Regulation of Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of November 29, regarding the protection of pension commitments with workers, including contributions from the policyholder, give the right to a reduction.

Please note that the aforementioned First Additional Provision of the consolidated text of the Law on the Regulation of Pension Plans and Funds has been amended, with effect from 4 September 2018, by the first article of Royal Decree-Law 11/2018, of 31 August, on the transposition of directives regarding the protection of pension commitments to workers, the prevention of money laundering and entry and residence requirements for nationals of third countries and which modifies Law 39/2015, of 1 October, on the Common Administrative Procedure of Public Administrations ( BOE of 4 September).

In any case, corporate social security plans must meet following requirements

  1. The principles of non-discrimination, capitalisation, irrevocability of contributions and attribution of rights established in article 5.1 of the consolidated text of the Law on Regulation of Pension Plans and Funds must be applicable to this type of contract.

  2. The policy will establish the premiums that the policyholder must pay, which will be charged to the insured.

  3. The policy conditions must expressly and prominently state that it is a Corporate Social Security Plan, with this designation reserved for insurance contracts that meet the legally established requirements.

  4. The contingencies covered must be only those provided for in article 8.6 of the consolidated text of the Law on Regulation of Pension Plans and Funds (retirement, total and permanent incapacity for work for the usual profession or absolute and permanent incapacity for any work, and severe disability; death and severe or great dependency of the participant), the main coverage must be retirement in the terms established in article 49.1 of the IRPF Regulations .

    Early withdrawal, in whole or in part, will only be permitted in these contracts in the cases provided for in article 8.8 of the consolidated text of the Law on Regulation of Pension Plans and Funds (long-term unemployment, serious illness and from 2025 for contributions with 10 years of seniority).

    However, and in order to facilitate those affected by the volcanic eruption on the island of La Palma to meet the unforeseen liquidity needs, article 11 of Royal Decree-Law 20/2021, of October 5, by which urgent support measures are adopted for the repair of the damage caused by volcanic eruptions and for the economic and social reconstruction of the island of La Palma (BOE of the 6th), has established, on an exceptional basis and exclusively during the period between October 6, 2021 and July 5, 2022 , the possibility that those insured by company social security plans may make early disposal in certain cases of their rights consolidated in these plans, establishing the conditions and the maximum amount of the disposal. The assumptions for early disposal of consolidated rights are discussed in this Chapter, within the common rules applicable to contributions to social security systems, in the section on " Early disposal of consolidated rights ".

  5. Company pension plans must offer an interest rate guarantee and use actuarial techniques.