Social Security wants the Government, unions and employers to supervise public pension funds

Public pension funds, defined by Social Security, managed by private companies and controlled by the Government, unions and employers. This is the initial proposal for the regulation of public pension funds presented this Monday by the Ministry led by José Luis Escrivá to the social agents at the negotiating table on pensions, according to the draft that has had access to and how has advanced El Periódico de España.

What are the occupational pension plans that the Government wants to promote through a large public fund

What are the occupational pension plans that the Government wants to promote through a large public fund

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Minister José Luis Escrivá announced months ago the intention to promote in Spain the so-called “occupational pension plans”, through more tax advantages, but also through a public pension macro-fund (which seems to eventually be several public funds).

The Budgets of 2021 and 2022 have already taken steps in the extension of the fical benefits of these collective pension plans for workers, which complement the public pension, to the detriment of individual pension plans. Now, the Ministry of Social Security has presented to the social agents the second ‘leg’ of its promotion plan: a draft of the law that will govern public pension funds.

The legal text establishes the bases of these public funds on the one hand and, on the other, establishes the regulation of what it calls “simplified pension plans”, collective plans that would be negotiated within companies, Public Administrations or associations of autonomous, but that would be assigned to the public funds already created and to their operating rules.

Control commission that supervises public funds

From the legal proposal it can be deduced that the Social Security, through a Promoting Commission of five members, will be in charge of laying the foundations for the operation of the public pension funds. This Promoting Commission, for example, will constitute the public funds themselves, will establish their investment strategies, will have the right of veto on decisions of the Control Commission of the fund and will be able to dissolve the fund, among other measures.

“The assets of the pension funds will be invested exclusively in the interests of the participants and beneficiaries, taking into account the profitability, risk and social impact of the investments,” the draft notes.

Once the Social Security Promoting Commission lays the foundations of the public pension fund in question, it will not be the Administration that manages this fund, but private companies through a public tender. In addition, companies of a certain magnitude, because the regulation proposed to social agents is committed to entities with a track record that guarantee the “solvency” and “liquidity” of public funds, so everything indicates that they will fall on large financial or sector companies. of pension funds. These management companies will take a commission in exchange, which “in no case” may exceed 0.40%, establishes the draft.

Of course, the pension fund management companies will be supervised by a Control Commission that supervises that the operating standards set for these institutions are met. Social Security has proposed that this oversight commission be made up of 17 members: nine appointed by the Ministry of Social Security, four who are proposed by the unions with the most representation and another four members proposed by the majority employers.

The Ministry proposes that the duration of the mandate of the Control Commission is “six years”, but that in the middle, the renewal of “half plus one” of the people who form it takes place. Their remuneration will be set in a regulatory manner.

What functions would this commission have? The monitoring of the fund’s operating rules, “examination and approval of the performance of the managing entity in each financial year”, replacement of the company that manages the public fund and “suspension of the execution of acts and agreements contrary to interests of the fund “, among others established by the Law of Pension Plans for the control commissions.

Unions warn of their misgivings

The legislative draft also attaches great importance to collective bargaining within companies, through which agreements could be reached on “simplified employment plans” for their staff, which adhere to any of the existing public funds. These simplified plans are not only reserved for the private sector, but could be agreed by Public Administrations for public employees and by associations of self-employed workers, professional associations or mutuals for self-employed workers.

The regulation also states that the pension plans of the associated self-employed system, promoted by the associations of self-employed workers or by professional associations, will have to be transformed into the new simplified pension plans or into individual plans within a maximum period of “5 years” .

CCOO and UGT have issued a statement in which they clarify that “what the Government has raised today and has been leaked to the media is a partial development of its commitment to public funds.” The unions warn that this draft “does not address essential issues in this area in relation to the rights of workers and that it implies substantial changes to the current regulation of employment pension funds”, which the workers’ organizations do not share.


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