November 29, 2020

The Government hopes that “more than half” of the workers have a supplementary pension plan

The minister José Luis Escrivá has shelled this Wednesday a little more his roadmap to promote the employment pension plans. The head of Social Security explained that the Government wants to “extend the coverage of collective pension plans to more than half of the employed population”, which would mean “multiplying by three or four the penetration quota of these plans” complementary to the public pension.

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Currently “one in six workers” in Spain has a supplementary pension plan of this type, “a very low number” in the opinion of the minister, who has stressed that in countries such as Belgium, France and Germany they reach “one of each two “, Escrivá explained in the conference Pension plans in Spain organized by Cinco Días, El País and Ibercaja. The occupational pension plans are known as the “second pillar” of the pension system, after the first (the public system) and followed by the “third pillar”, the individual pension plans.

¿What is this second pillar?? These are supplementary pension plans that companies make available to their workers so that, on a voluntary basis, they have a supplement to their public pension when they retire. There are various formulas in the collection of the amount accumulated in the years of work, suddenly or gradually, and in the mechanism of contributions to the pension fund, which can be made by the worker and the company as part of the employee’s remuneration plus beyond the salary.

“From the Government we verify that a change of model is needed that is firmly committed to collective plans, which are those with the lowest commissions and on which we can work better,” said the minister, who recalled that the Executive of The coalition has already taken its first steps in this regard in the draft General State Budgets for 2021. Public accounts extend the tax deductions for employment pension plans, up to 10,000 euros per worker, while cutting existing ones for individual plans. In addition, they include the creation by the Government of a public pension fund to promote this second pillar.

“Automatic enrollment” in plans

After the political agreement in the Toledo Pact commission, which has already issued his 22 recommendations for the future of the system, it is time for the Government to legislate. Before, the Executive is going to submit its pension reform to social dialogue with the unions and employers, where it hopes to reach an agreement. The unions urge the minister to sit down to negotiate and their plans, which they regret knowing through public announcements and not at the dialogue table.

José Luis Escrivá explained this Wednesday some of the “challenges” and the measures that the Government intends to apply to increase savings for retirement as happens in other European countries. The intention of the Executive is to reach “more than half of the employed population” in these complementary plans and, especially, to reach groups that until now have no facilities or possibilities to hire them, “SMEs, the self-employed and public employees “, the minister has listed. “And that it reaches young people”, Escrivá stressed, so that “retirements beyond 2050 have a truly complementary system that fulfills its long-term savings functions.”

To achieve these objectives, in addition to the greater tax advantages that have already been proposed, the Government is committed to facilitating access to the plans through the new public pension fund that it will create in the coming months. The idea is that the fund “is an easy option by default for new plans” of employment pensions that are created and, in addition, “we are going to gradually facilitate that each worker who begins to work in a company or the Administration has the automatic assignment to a pension plan, so that you can save easily and with advantages, “he said. Automatic enrollment in employment plans exists, for example, in the United Kingdom, in which workers are registered and can voluntarily reject it.

“Let’s learn from everything we have seen that has worked to push savings in those groups that have not had access, nor have we made it easy for them. The idea is to make it easy for everyone,” insisted Escrivá, who nevertheless recalled that the “anchor” of the pension system in Spain will continue to be the public system.


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