Autonomos in Spain (freelancers) get a pretty rough deal, in my opinion, but one thing just slightly improved: we can now get a private autonomo pension in addition to paying into the state system. Here’s what that is and how it works, to the best of my understanding because they don’t make it particularly easy.
What is an autonomo?
Being freelance in Spain means you’ve signed up officially (a process I’m not going to describe here but I recommend this Facebook group for advice, insights and sympathy). You charge VAT (if applicable to your economic activities) and pay taxes quarterly directly to the government. Your Social Security payments are aligned with “tramos” (income brackets – another incomprehensibly complicated system) and entitle you to receive a state pension when you retire as long as you’ve paid in for 15 years with 2 of them being within the last 15 years before retirement, currently at age 67, so from age 52ish.
Depending on what Social Security you pay per month, your state pension will vary but, for all but the highest earner, it is unlikely to be enough to retire on. You can get a simulated forecast here. Scroll down to “Simulador de jubilacion” and then opt to modify the components to suit your situation. NB It’s a simulation and not a precise calculation but you can modify the cotizacion to see what you’d get if you upped your contributions per month.
Private pensions in Spain
A few years ago, anyone used to be able to contribute 8,000€ to a private pension and see their tax bill go down at Renta time as these contributions were tax deductible. This means you don’t pay tax on that income now but, instead, when you retire, you’ll pay tax on the withdrawals as these are classed as income. Many people might expect to be earning more as a worker than as a pensioner so this means paying a lower tax rate later on compared with now. For low earners, it probably just means paying less tax now but an equivalent tax later on instead. Anyway, a lower tax bill/higher rebate is always nice.
The government then reduced that tax deductible amount from 8,000€ to 2,000€ and then again to 1500€ which made the tax saving negligible (though any saving is a good thing so still worth it, I think, plus a pension is a kind of locked savings account as you can’t access it until you reach a certain age – often around age 55 – so this can be better than another type of account that you might choose to liquidate early and then have even less at retirement.)
I can only assume the reason the Spanish goverment wanted to disincentivise private pensions was to encourage people to choose to pay more into the State system instead (those monthly Social Security payments are also tax deducted but not all of it goes to your pension and it’s hard to work out exactly what does go to what.).
However, in March-ish 2023, the government announced that autonomos could boost their pension contributions by 4250€ on top of the 1500€ for a total of 5750€ per year, all of which is tax deductible*. By contrast an employee with a workplace pension (still not that common in Spain) can contribute 10,000€ so it’s not as good but better than it was.
Who offers the autonomo pension in Spain?
Bizarrely (adding to the many things I don’t and will never understand here) hardly any banks offer it.
Most DO offer the regular private pension (the 1500€) one. Even the ones that do offer the autonomo pension apparently don’t even tell existing pension customers about it. I had, and still have, a private pension with Finizens (a robo advisor with the lowest fee I could find at the time on a private pension plan – 0.55%.) and I wrote and asked them if they were going to provide the autonomo pension and they said, “We’ve had internal discussions about this but currently have no plans to”. So they are happy to lose the future management fee on years’ worth of contributions of up to 4250€ and I don’t get it. Maybe the hassle and bureaucracy of complying with the new autonomo pension is as uneappealing as you might imagine if you’ve had any dealings with Spanish bureacracy so far.
Anyway, I was only able to find Indexa Capital who were doing it. Later, BBVA seemed to add one, or it could have been Sabadell, but I have combed their websites a few times trying to find it again and can’t. When I did see it the first time, digging through to get the buried info, I saw that fees were around 0.8% so way too high. The Indexa one is 0.59%. Since writing this post originally, I now see Santander has an autonomo pension plan and its fees seem to total 0.49% but you can only choose between two plans and both are too conservative for anyone under 50.
Indexa was easy to open and the main offer when I opened it was essentially a target date fund (so changes the ratios of what it’s invested in as you get older) which is accessible after 10 years, and you didn’t get to choose what it’s invested in or the composition of bonds to stocks. In 2024 they added the option to choose other portfolios so you’re not forced to take their target date options any longer, yay!
You can set up direct debit payments/standing orders into it monthly and/or pay in one-off amounts whenever you want, up to the limit of 5750€ by the end of December each year (across all your pension products so it might be 4250€ into this account and 1500€ into a regular private pension).
I chose to keep my private pension with Finizens since the fee is lower but, if you do want to move another pension (and you really should if you find a management fee lower than what you already have open), it’s very easy and quick to do. You fill out the details telling them where your pension currently is and they do the rest of the transfer for you in a matter of days. Your current bank will get in touch to offer you a deal but it’s unlikely to match what you’ll save on the fees over your lifetime. (If all this is double-dutch I have a course teaching about things like pensions which will help you make decisions like this.)
The downsides of the autonomo pension in Spain
“It’s better than nothing, but it’s not great” is the maxim for so many things in Spain where freelancers are concerned. And so it goes for the autonomo pension.
The 30% net income rule
The major catch is that not everyone can contribute 5750€ per year because there is the snag that you’re only allowed to put in 30% of your net annual income, ie your income minus expenses. To be honest, I am not 100% clear on whether you’re not allowed to put in more than 30% net income OR it’s just that the maximum contribution is 5750€ but you can only receive a tax deduction on 30% net. If someone enlightens me who can cope with the Spanish better, I’ll update this.
Anyway, this is a pain because most freelancers can’t predict their income and expenses so you can’t just set your monthly payments at the right level to hit the 30% net requirement. At the end of the year, by December 31, you therefore need to do a calculation based on your 1st, 2nd and 3rd quarterly tax returns and your own calculation of your 4th quarter. (Your accountant is unlikely to process this for your until the first or second week of January.) Then you can pay in any difference if you have the cash spare, perhaps having set it aside in an interest-earning account in the meantime. On the following year’s Declaracion de la Renta, you’ll then declare these pension contributions and get the tax break.
I don’t particularly recommend making no monthly payments during the year and setting it all aside to then pay in whatever is equivalent to 30% net because you miss out on the gains that come from having your money invested for the last year. (Again, if you want to understand more about this, why dollar:cost averaging is the way to go, check out my course, the No-Stress Money Plan.)
I don’t like this restriction because it’s fiddly and because it’s not fair. Employed people can not only contribute more to a workplace pension than we can to an autonomo pension in Spain, they don’t have expenses so any net income requirements affect them less. If you have a business with high expenses, let’s say, because you’re starting out, your pension pot suffers.
No control over what it’s invested in
Not many banks offer the autonomo pension but also you can’t choose a higher or lower risk profile which may or may not be OK with you NB This may have changed now (2025). I would possibly choose a higher amount of stocks than Indexa has assigned to me, and less focus on European stocks/bonds, given the choice but I’m not overly bothered because I have other investments and set those up as I please. The plus side is there is really nothing for you to do or think about once it’s open and money is going into it.
UPDATE 2024 Indexa does now offer more portfolio choice. If you don’t know what any of the portfolios mean, you might want to do the No-Stress Money Plan to learn about stocks vs bonds and how investing works.
It’s not enough to retire on
Assuming you make the full contribution of 5750€ per year and you do that for 20 years at a yearly return of 5%, your pension pot would be about 190,000€. That sounds like a lot, but divide it by the number of years you hope to be alive after retiring and it’s not a high income (though, of course, you can keep most of it invested and keep drawing income from it so the calculation is not as simple as just dividing it). You will probably want other types of investment, that don’t come with a net income limit, may have lower fees even than Indexa, may have better returns, and may allow you more choice and control. Note that those investments won’t come with tax breaks so I’d max out the pension allowance before turning to those.
In the future, the net income rule may change or the total tax deductible may go up. Indexa did email me near the end of the year to remind me that I had allowance available. They have no knowledge of my earnings so can’t know whether I’d get a tax break on any more contributions. This makes me suspect that the 30% net income allowance is purely for tax deductions and that you can stil pay in 5750€ a year if you want to. Again, I’m not sure and you should ask an accountant.
It’s not tax-free
In other countries, like the UK, you can pay into pensions that give all or part of the payout tax-free. That’s not the case in Spain. Your pension income will be taxed as income when you withdraw it. You may want financial advice as to how to manage pensions when you reach retirement.
Should you take out an autonomo pension in Spain?
As I am not an accountant or a financial advisor I can only offer education and information. But the advantages of the autonomo pension in Spain are:
- a tax break on contributions equivalent to 5750€ per year or 30% net annual income, whichever comes first. This is an almost immediate advantage to your wallet.
- savings that grow (hopefully!) more than a typical savings account. Average returns in the past on Indexa pensions were 5% per year while the savings accounts have been at best 2-2.5% interest in 2023 and will likely be lower when inflation is fully under control. You can usually expect investments and pensions to beat (ordinary) inflation.
- the money is only locked away for ten years according to the Indexa policy stated when you open the account. This likely makes it available to you well before the State pension age of 67. Also, it is not subject to any changes to the state retirement age which the goverment could make before you retire.
- if you don’t contribute for long enough into the Spanish State pension, it may be that the only pensions you receive are the ones you have privately.
- you can continue to earn while receiving a private pension and no deductions will be made from what you receive.
- it tops up the State pension, making retirement more comfortable.
I’m Nicola – a former EFL teacher and educational writer living in Spain. I also offer easy to understand online courses on personal finance, investing, pensions and “money stuff” because I got interested after sorting out my own dire finances in 2021 and realising my peers knew as little as I used to about money.
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