What is a PIAS and is it worth it if it pays no interest?

PIAS stands for Plan Individual de Ahorro Sistemático, or Individual Systematic Savings Plan. It is a savings insurance product in Spain: you pay money in regularly (or in one go) to an insurer, which manages it so you can take it back later, for example as a supplement to your retirement.

For years many banks offered it to their customers. The sales pitch was simple: safe capital, no stock market risk and a tax advantage for holding it a long time. For anyone who wanted nothing to do with investing, it sounded like the responsible choice.

What was not always explained in the same detail was how much that money earned in the meantime. That is where the problem lies.

If your PIAS guarantees the capital but pays almost no return, the number on the statement does not go down. But prices do go up. Inflation (the general rise in prices, which Spain's INE measures) means each euro buys less as years pass.

The result is a silent loss: you have the same amount in euros and less purchasing power. There is no moment when you see it fall; fifteen years later, that sum simply does not stretch as far as it would have today.

Then there is the opportunity cost. While that money sits still, other options, with more or less risk, have been paying something for it. If you change the return in the simulator above, you will see the gap does not stay at a few euros: it grows month after month through compound interest.

I know people who came to see it this way over time: a product sold as responsible saving that, looked at calmly, served the party managing it more than the person paying in. It is not a scam or anything like that; it was a product considered reasonable that does not hold up well against today's comparisons.

Some PIAS offer a guaranteed return (called the technical interest rate), others share part of the insurer's profits, and others are linked to investment funds, where the result depends on the market and you can lose money. What I say about those that earn nothing does not apply equally to all of them.

If yours pays a return, being positive is not enough. Compare it with three things:

• Inflation: if it earns less than prices rise, you are still losing purchasing power.
• Fees: in fund-linked PIAS, costs take away return every year.
• Today's alternatives: what a high-yield savings account or a deposit pays now, with more liquidity and little risk.

Your contract and the insurer's latest statement or annual report tell you what type of PIAS you have and what return applies.

• High-yield savings account: pays interest on your balance and lets you withdraw whenever you like. Terms change often, so check them regularly. The most convenient option for goals one or two years away.
• Term deposit: you lock in a rate for a period and give up some liquidity if you cancel early.
• Treasury bills and bonds: you lend money to the state for a set term. They trade on the market, and their price can move if you sell before maturity.
• Money market or bond funds: invest in short- or medium-term debt. They carry more risk than the options above, and the return is not guaranteed.
• Index funds: track a stock index such as the MSCI World. Historically they have offered more return over the long term, but with sharp falls along the way, and they can lose value for years.

None of them is "the right one" in the abstract. What changes is what the money is for and when you will need it. If you want to set priorities for a specific amount, see what to do with €10,000 in savings.

If you have paid into your PIAS for years and never taken money out, you have shown something that matters a lot: you can leave money alone. You did not touch it for a small emergency, a treat, or when something seemed urgent.

That is exactly the skill that is hardest to build for long-term investing in index funds. Markets rise and fall, and people who sell during the drops often turn a temporary loss into a permanent one. Those who hold on and keep contributing are the ones who let time do the work.

Think of it this way: you already have the habit. What may be missing is a place where that habit pays more. Switching products is a decision that deserves a cool head and a comparison of terms, but the hardest effort is already behind you.

• When will you need the money? If it is within a few years, safety and liquidity weigh more. If it is decades away, you can accept more ups and downs.
• What does it cost to leave? Before moving anything, check the terms of your contract and what cashing it in or transferring it involves. This article does not cover that, and it is worth talking to a professional.
• How big a drop could you sit through without selling? If a sharp fall would make you bail out at once, a calmer option will serve you better even if it earns less.

To see how much difference two returns can make with your own numbers, use the full calculator.