Corporate pension plans not only help employees save for retirement but also offer economic and tax benefits for companies that implement them. One of the most significant incentives is the reduction in Social Security contributions, as regulated by current legislation.
Below, we explain how these bonuses work, the requirements to access them, and the benefits for both employers and employees.
Applicable regulations
According to the General Social Security Law (Royal Legislative Decree 8/2015, of October 30), in its Additional Provision Forty-Seven, companies are entitled to a reduction in contributions for common contingencies to the Social Security system, provided these are directly linked to employer contributions to collective pension plans.
These contributions are considered tax-deductible expenses, in accordance with Royal Decree 668/2023, provided certain requirements are met.
How the bonus is calculated
To calculate the maximum monthly Social Security bonus, the following steps are followed:
- Take the minimum daily contribution base for Group 8 of the General Social Security Scheme (for 2024: €44.10)
- Multiply it by 13 days:
€44.10 x 13 = €573.30 - Apply the contribution rate for common contingencies:
€573.30 x 23.6% = €135.29.
This amount (€135.29) represents the maximum monthly bonus per employee.
If a company contributes this full amount to the pension plan, it can save €31.92 per month per employee, by applying the same 23.6% rate.
For lower contributions, the bonus is calculated by applying the 23.6% rate to the actual amount contributed to the pension plan by the company.
Tax limits
The tax limits for eligible contributions are defined in the General State Budget and are currently as follows:
- Employer contributions: Up to 30% of the employee’s salary, with a maximum annual cap of €8,500 per employee
- Employee contributions: An additional annual limit of €1,500.
Together, these allow a total annual tax benefit of up to €10,000.
Requirements to qualify for bonuses
To benefit from the Social Security contribution bonuses, companies must meet the following criteria:
- Collective nature of the plan: The pension plan must be available to all employees or a defined group, ensuring equality and non-discrimination (as stipulated in Royal Decree 668/2023)
- Planned contributions: Contributions must be specified in a collective bargaining agreement or a formal agreement between the company and its employees
- Compliance with tax and reporting obligations: Contributions must be correctly declared in the contribution bases and must adhere to legal limits.
Benefits for companies and employees
For companies:
- Reduction in labor costs: Social Security expenses decrease through applicable bonuses
- Attracting and retaining talent: Pension plans enhance the company’s employee value proposition.
For employees:
- Increased retirement savings: Contributions are exempt from personal income tax (IRPF) until they are withdrawn
- Tax benefit: Employees can reduce their taxable income by up to €10,000 per year, combining both employer and employee contributions.
Conclusion
Under current legislation, corporate pension plans and their associated Social Security contribution bonuses are strategic tools that benefit both employers and employees. They not only help optimize labor costs but also promote long-term financial planning and savings.
These measures foster a more stable and committed work environment, contributing to collective financial well-being and a more secure future for all.
