May 14, 2021

Private pension funds continue to lose participants despite reaching record profitability in 2019

Not even with record returns is exceeded the bleeding of exits from private pension plans, continues since 2010. Last year, the one with the highest profitability for 20 years in the sector, as the Inverco employer’s association highlighted on Wednesday, pension funds lost 75,041 participants, a 0.8% drop. Since 2010, 1,273,270 participants in these private savings tools for retirement have left.

In total, 2019 closed with 9,555,911 accounts of participants in private pension funds, after which it is estimated that there are seven and a half million people, since many participants have opened more than one plan “in order to diversify their investments “, notes the annual report of Inverco, the Association of Collective Investment Institutions and Pension Funds.

The employer has presented this midday its results of 2019 and its forecasts for this year. Ángel Martínez-Aldama, president of the organization, has highlighted as a more relevant fact that the past year has been “exceptional, with very good returns”, the highest of the last two decades. “Too bad he doesn’t accompany us in subscriptions,” he acknowledged.

While 2018 pension plans registered a negative return, the 2019 one reached 8.8%, “the best profitability of the historical series”. Fixed income, which accounts for almost half of total pension fund portfolios (45.2%, was much lower: from 0.65% in the short term to 2.91% in the long term. The highest returns were reached in the funds with variable income, of 23.6%.

If the historical series is followed, it is verified that this 2019 has been atypical, since pension funds usually register more modest returns. The employer’s estimate for this year 2020 is between “2.5% and 3.5%” of profitability.

Despite the reduction in the number of participants, the money accumulated in pension funds increased by 8.4% last year, to 116,419 million euros, according to the employer’s data. This increase is mainly due to the increase in profitability, explained those responsible for Inverco, and to a much lesser extent to the increase in the amounts deposited by savers. In fact, two out of three participants do not contribute any money to their plans.

For this 2020, the employer seeks that the pension funds total a total of 120,000 million euros, 3.1% more than in 2019.

Tobin rate reluctance

This 2020 is marked by the formation of the Coalition Government of PSOE and United We can. The latter, with a very critical stance with private pension funds, which considers that there is no need to tax incentives from the State. The pension area in the Government has nevertheless been in the hands of the PSOE, which has entrusted the reform of the system to the independent José Luis Escrivá, former head of AIReF.

Since Inverco, they have been cautious about their expectations regarding the new Government, for which Martínez-Aldama has asked for “time” to verify what are the measures finally applied by the Executive. “We do not believe that it is very different from the rest of previous governments,” said the president of the employers’ association on the policy of promoting savings, “which is inherent in any government.”

The measure that is confirmed by the Minister of Finance is the implementation of a tax on financial transactions, the so-called Tobin Rate, which investment funds oppose. “We have already said it, it will make it more expensive to invest in Spanish equity assets,” said Angel Martínez-Aldama, who believes that “it will be an additional cost for the participants.

Given the will of the Government to approve the tax, the employer is committed to ensuring that it does not depart from that approved in other countries such as France and, in the best case, that it be implemented jointly and in accordance with several states so as not to generate differences between countries


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