The renewed employment pension schemes are taking off in the first semester of the course. The great bet of the former Minister of Social Security, José Luis Escriva, was to divert retirement savings from individual plans to the second pillar of pensions, which requires the involvement of companies and workers. The implementation of the construction sector plan paves the way for the rest of the sectors, as do the various professional associations and associations of independents that have launched their product. The projections are positive: Nearly 600,000 new participants in six months indicate that savings in employment plans this year will break the 2004 record.when the General State Administration (AGE) created its vehicle and incorporated a good handful of public sector workers.
The simplified employment plans aim to integrate savers at the sectoral level, particularly among SMEs or the self-employed, who have lower retirement prospects and, until now, are practically “unknown” in this sector.
The term “simplified” refers to the process of registering the company and integrating workers into a product that works for all companies in a sector. The goal has always been to accumulate such high wealth that it manages to reduce costs and commissions, so that it is more attractive to offer part of the salary in the form of savings.
After reaching over a million participants at the beginning of the century, Savings in individual plans have been spent two decades in the middle of nowhere and undermined by the deep financial crisis, which has driven away its savers. The various cuts that Escrivá applied to the different plans during the last legislature were the final touch to the third pillar. Contributions to the individual account could significantly reduce the personal income tax base, up to 8,000 euros or 30% of income. These benefits were limited to a maximum of 1,500 euros, trying to direct savings only towards employment plans.
This is why employment projects are gaining ground among workers who want to provide a retirement supplement. Contributions to employment plans already exceed those of individual plans due to a very important nuance: construction workers contribute automatically, as defined in the collective agreement, which is why they are “active accounts” that increase wealth.
Is it enough or not? It is as important to add workers with parallel coverage to the public pension and to contribute, as to allocate a considerable part of it to this piggy bank. Of the estimated salary increase of 10% in three years (from 2022), 3.25% of the payroll of construction workers is allocated to this retirement “account”. This is the big “must”, contributions of around 300 euros per year which seem insufficienteven when applying the profitability accumulated over an entire working life.
In the first half of the year, the profitability of investments of wages set aside by construction workers and self-employed people who started saving generated 365 million euros; The profits, that is, the collection of savers who save their plan, were 781 million. Contributions and profitability increase assets.
The big year and still challenges
The integration of private sector employees, mainly through the construction plan, will lead the level of new savers in employment plans to break an untouchable record in two decades. But the actors involved in the creation of the pioneering pension plan in Spain have made it clear that this is a process of at least three years. In the meantime, the self-employed are gradually moving towards this financial vehicle. When the dynamics of this sector, which already includes large companies and includes small and medium-sized enterprises, stops, it will be necessary to broaden its scope if the objective of 10 million workers covered is to be achieved.
Several industries are jockeying to determine the viability of incorporating this benefit into their companies and their workers. They are doing so hand in hand with some of the country’s leading pension consultants and fund managers, who see it as a lucrative sector in which to compete. Steel companies, hotel companies and department stores are all in the starting blocks.
The initiative must also be state-driven. Some sectors lack more fluid communication and greater involvement of the Social Security portfolio. This role also belongs to the Ministry of Tax authoritieswho holds the key to reactivating the country’s largest employment pension scheme, that of workers in the General State Administration, which has not received employer contributions for more than a decade.
The development of the public pension fund, Escrivá’s project for the State to encourage savings in employment plans under the management of five financial entities, awaits a new modification of its regulations. In June, Social Security published a draft royal decree to modify a series of aspects that would allow the plans to be definitively launched. If it gets the green light after public participation, it will mean that its implementation has been unblocked following the request of employers’ and unions’ organizations to collect as an institution the salary assigned to the member designated as “supervisor”.
