87% of companies have shown their willingness to make a contribution on the salary of their employees to nurture the pension plans of their employees, although 63% have indicated that the economic conditions do not currently exist to do it and, to this day. On the other hand, only 27% of the companies surveyed have a pension plan, which is more common in sectors such as finance, services, chemicals and pharmaceuticals. These are some of the main conclusions of the report “Situation of Pensions in Spain. Edition 2020 »prepared by KPMG Abogados and which is the result of a survey of 63 Spanish companies, including many multinationals from sectors as different as finance, industry or distribution and from Spanish subsidiaries of foreign multinationals.
The study also analyzes the types of pension plans within companies: The 79% of those analyzed are defined contribution and most of them were transformed into this modality after the externalization regulations of 2002 and those that remain in force correspond, in most cases, to closed groups where the entry of new participants is not allowed.
The percentage of mixed plans It normally responds to defined contribution plans for the retirement contingency and defined benefit for the death and disability contingencies. From the analyzed sample, 61% of the plans are aimed at the entire workforce and 20% at management personnel. Most of the retirement plans implemented in Spain correspond to what is known as Employment Pension Plans “since they are the ones that bring together the greatest advantages, both for companies and for workers”, has pointed out from KPMG Abogados. Regarding the contribution formula, 74% of companies have opted for a fixed percentage of the pensionable salary, in most cases the gross fixed salary, according to the aforementioned study.
But nevertheless, 73% of those surveyed recognized that they have an individual savings system for their retirement And, of them, despite the impact of Covid-19, almost 60% claim not to have modified their usual contribution for this purpose. The investment policy of retirement plans is usually conservative, which seeks to preserve capital and it should be taken into account that the investment strategies of these plans are set based on the time horizon of retirement.
In the opinion of Álvaro Granado, the director of the Pensions area of KPMG Abogados, “companies and individuals must become aware of the need to carry out correct retirement planning.” In this sense, it has verified “The scant development of complementary social security in our country” and pointed out that the little success of private social security (private pension plans) is due “to the sufficiency of the income from the pension granted by the State and to the high cost of implementing retirement plans in companies.”
In this regard, Granado has warned that future pension reforms will affect the amount of public pensions and has indicated that «The impact of the reforms highlights the need for a greater complement through private savings ».
More tax incentives
Tax incentives are a recurring theme when it comes to talking about pension plans and welfare systems. Regarding the opinion of the companies participating in the study on current tax incentives for savings, 83% of them consider that they are not enough and they have added that the Government would have to encourage savings for retirement through both collective and individual savings instruments.
In relation to the impact of Covid-19 on pension plans, 90% of the companies surveyed have assured not to have carried out a reduction in the amount of contribution to the social security plan as a result of the crisis while the other 10% have reduced contributions and, of these, a third have done so by up to 75%. In the chapter on news that this crisis has generated, the creation of an exceptional liquidity scenario for investors affected by an ERTE due to force in Mayr linked to Covid-19, which has been used by 44,209 people as of last June, according to Inverco data.
In parallel, the monthly payroll of pensions has continued its climb and adding a record: In August 2020 it amounted to 9,904 million euros, which represents a growth compared to the same period of the previous year of 2.30%. Thus, in 2020, the deficit has been increased by the very evolution of the determining factors in the sustainability of the system, such as the birth rate, life expectancy and economic growth, as well as by the impact of the health crisis and economic derived from Covid-19.
At the end of July, social contributions decreased 3.51% compared to the same period in 2019 due to the different measures that have been put in place to deal with the pandemic, including exemptions in Social Security contributions, as well as the drop in activity. The deficit registered by Social Security has climbed to 5,167.60 million euros as of July 31, 2020, which is 0.46% of GDP.
Granado has indicated that, among the conclusions of the Toledo Pact, there is one that includes «Discourage voluntary early retirements, which have increased since 2014, and encourage delayed retirements with greater incentives. The purpose is none other than that workers continue in their jobs beyond reaching retirement age, delaying the perception of retirement.