The Council of Ministers approved this Tuesday the creation of a public pension fund linked to employment. Specifically, a bill has been approved that seeks to create a public alternative to promote this route of private savings complementary to public pensions. The Minister of Social Security, José Luis Escrivá, has trusted that this regulation is approved before the end of the first semester of next year, once it has completed all the administrative and parliamentary procedures.
How they work, who can access and other keys to the public pension funds that Escrivá prepares
The idea of this new public pension fund comes from afar and, in fact, the Government has hurried the deadline that it had set itself. This fund was a commitment that the Executive included in the General Budgets for 2021 and was given twelve months for its creation. This term expired at the end of this course. Escrivá has defended after the Council of Ministers that with this rule three commitments of the Government are fulfilled, both in the Toledo Pact, the recovery plan and the aforementioned budgets for this year.
When it comes to the pension system, there are three pillars. The first is that of public pensions. The second, that of private employment plans. The third, the private individual pension system. Escrivá has repeatedly opted to promote the second of the pillars, which is poorly developed in Spain beyond some large companies in the country. These systems are made available by companies to their workers so that they can join if they wish, on a voluntary basis. With them, employees will have a supplement to the public pension when they retire. Its conditions are agreed through collective bargaining and there are various formulas.
The Executive had already been preparing the ground before this law to encourage employment plans. In the 2021 Budgets, the limit of annual contributions to individual private plans was reduced from 8,000 to 2,000 euros, which could also be later deducted in the personal income tax return, while the limit for employment funds was increased. This measure and the creation of a new public competitor in the sector have been widely criticized by insurers, banks and funds, as well as the CEOE, which came to speak of unfair competition. Among the unions there have also been misgivings in relevant aspects such as the management of these funds.