Nearly 300,000 Spanish savers have withdrawn from the nationS private pension system in the last five years, a trend directly linked to revisions in tax incentives for retirement contributions. New data from Inverco reveals a steady decline in individual pension plans, falling from 7.5 million in 2020 to just over 7.2 million at year-end 2024. The outflow, exceeding €711 million in the last year alone, underscores growing concerns about the future of private retirement savings amidst a shifting policy landscape in Spain.
Nearly 300,000 individual savers have exited Spain’s private pension system over the past five years, a trend sparked by a series of tax changes impacting pension contributions, according to data from Inverco. The number of individual pension plans fell by 291,448, leaving the sector with just over 7.2 million accounts at the close of last year – a decline from the 7.5 million recorded at the end of 2020.
The reduction in accounts coincides with changes to tax deductions on pension contributions. In 2020, the maximum amount deductible from personal income tax (IRPF) for pension contributions was reduced from €8,000 to €2,000. A further reduction to €1,500 followed twelve months later. These changes reflect a broader government effort to reshape Spain’s pension landscape, impacting both individual and employment-based plans.
2025 saw the largest drop in participants, with 72,533 accounts closed – more than double the approximately 29,000 cancellations recorded in 2024. The surge in withdrawals in 2025 was partly attributable to a new regulation allowing individuals to access the full amount of their private pension funds without justification after ten years of contributions. While pension managers didn’t anticipate a mass exodus, net outflows of funds have increased significantly.
Data from the industry association show a net outflow of over €711 million, as pension payouts (€2.296 billion) exceeded contributions (€1.585 billion). This figure is nearly ten times higher than the €72.7 million net outflow recorded in the previous twelve-month period. In 2022, after the €1,500 tax limit was implemented, net withdrawals totaled €622 million, resulting in the closure of 66,716 accounts. Cancellations surpassed 70,000 in 2023.
The industry group estimates the cumulative impact of these tax changes on pension savings to be over €12.5 billion over the five-year period, representing an annual reduction in contributions of between €2.5 billion and €2.7 billion. This calculation is based on a comparison with 2020, the last year savers could benefit from the €8,000 deduction. In 2020, pension contributions reached a record €4.3 billion, a level not seen since before the 2008 financial crisis, boosted by increased savings during the Covid-19 pandemic.
The Spanish government, under Pedro Sanchez, implemented the tax changes with the belief that the previous tax benefits disproportionately favored high-income earners. However, the industry argues the policy primarily affects those with gross incomes between €24,000 and €51,000 – a bracket that accounts for nearly half of all savers making regular contributions. Industry representatives are now calling for an increase in the minimum deductible threshold to €5,000.
The shift in tax policy also aimed to encourage greater participation in employment-based pension plans. However, these plans have yet to gain significant traction. As of December 31, the system held €40.871 billion in assets, a 5.3% year-over-year increase, with approximately 3.1 million participating accounts. This represents less than half the assets held in individual plans, which totaled €96.331 billion, a 4.4% increase in the year, despite €169 million in net outflows.
The rollout of the Public Sector Employment Pension Promotion Fund (FPEPP) remains delayed. The initiative, originally conceived by José Luis Escrivá, the current Governor of the Bank of Spain (BdE) during his tenure as Minister of Inclusion, Social Security and Migration, aimed to promote employment-based pension schemes. However, nearly three years after the tender process – which selected Caser Pensiones, Santander Pensiones, Ibercaja Pensión, VidaCaixa and BBVA as administrators – the fund’s commercialization has yet to begin.
A key criticism of the FPEPP is that the tax adjustments were implemented before the ‘macrofund’ project was operational. The original plan involved the five selected companies offering fifteen funds to collectively achieve €2.5 billion in savings within three years – a goal that remains uncertain pending the fund’s launch.
