Early payment of long-term unemployment pension plan

The DGT points out that, for the purposes of the possible application of the reduction in the event of early payment of a long-term unemployment pension plan, this exceptional liquidity assumption should be understood as produced at the time of complying with all the requirements demanded by the regulation of pension plans to be able to realize the consolidated rights.

The regulations of pension plans and funds allow the early redemption of consolidated rights in pension plans in cases of serious illness or long-term unemployment, provided that it is expressly contemplated in the plan.

On the other hand, the IRPF regulations provide for the application of a 40% reduction for benefits in the form of capital derived from contingencies from 1-1-2007, for the part corresponding to contributions made until 12-31- 2006, provided that more than two years have elapsed between the first contribution and the occurrence of the contingency (except in the case of disability benefits), also establishing a time limit for the application of the indicated reduction, which may only be applied, if applicable, to the benefits received in the year in which the corresponding contingency occurs, or in the following two years.

In this regard, it should be taken into account:

• If, prior to retirement, the corresponding benefit is charged in advance for an exceptional assumption of liquidity (serious illness or long-term unemployment), the retirement contingency shall be deemed to occur at the time of meeting the requirements to receive the advance payment retirement benefit;
• that the benefits in the form of capital derived from pension plans that may benefit from the reduction refer to the set of pension plans subscribed by the same participant and with respect to the same contingency;
• that once the reduction has been applied in a given year, the rest of the amounts received in other years will be taxed in full without the possibility of reapplying the reduction.

Therefore, if a capital is perceived as being in a situation of long-term unemployment and another when reaching retirement, given that the two benefits refer to the contingency of retirement, the reduction can only be applied in a single tax period (either when long-term unemployment has been incurred or when retirement occurs).

In the case raised by the consultation, an unemployed taxpayer, who participates in several pension plans with contributions made prior to 2007, questions the possibility of applying the 40% reduction to the amounts received as a result of enforcing the consolidated rights in the event of long-term unemployment.

In this regard, the DGT points out that the possibility of applying the reduction is conditional on the benefits being received within a certain period of time, the termination of which depends on the year in which the contingency occurs, and it is necessary to determine, in this case, in what year it should be understood produced the exceptional assumption of liquidity due to long-term unemployment.

Thus, it is considered that, for the purposes of the application of the aforementioned reduction, the exceptional liquidity assumption must be understood as produced at the time of complying with all the requirements demanded by the pension plan regulations in order to enforce the consolidated rights that , in the case of long-term unemployment, it will be considered produced when the following requirements are met:

a) being in a legal situation of unemployment, considering as such the cases of termination of the labor or administrative relationship and suspension of the employment contract contemplated as such legal situations of unemployment and complementary norms of development;

b) not be entitled to unemployment benefits at their tax level, or have exhausted those benefits;

c) be registered at the time of the application as a job seeker in the corresponding public employment service.

In the case of self-employed workers who have previously been integrated into a Social Security scheme as such and have ceased their activity, consolidated rights may also become effective if the requirements set forth in paragraphs b) and c) above meet.