Government plans to eliminate, or at least tweak, the tax advantages of individual pension plans to further incentivize those of employment they have been shot to the industry. First, because the sector considers that both systems are complementary.
Second, because they believe that to develop savings products for companies, something more is needed than better taxation. Especially considering that the base of the business fabric in Spain is made up of SMEs, with few employees and little capacity to contribute.
In fact, pension plan managers already grant companies with fewer than 50 or 100 employees, as well as the self-employed, the treatment of ‘individual’ if they want to contract a retirement savings product. That, or include SMEs in the so-called joint promotion pension plans.
Virtually all management companies offer this type of product that allows several SMEs to adhere to the same pension plan. They are products that tend to have lower commissions than the market average and operating expenses are also distributed among the different integrated entities.
However, their investment strategies are too generic, usually divided into the traditional profiles (moderate, conservative and dynamic). At this point is where the managers ask to go one step further to promote pension plans by business sectors, which can be more adjusted to the profile of certain clients.
Differences in the midst of crisis
“It is not the same to work in a sector more linked to the evolution of the economy than in another that, for example, is not so affected by periods of crisis,” they explain from a national manager. “It is possible that if there is more division by specific sectors, strategies can be developed better linked to the objectives of the participants”, They coincide from another entity.
CaixaBank, For example, it does market (in addition to generic joint promotion plans) four specific plans for four different sectors: local corporations, flower and plant trade workers, garden center workers and bingo game organizers.
“The regulation should tend to promote this type of plans by sectors”, agree from several independent managers consulted. This is also considered by the employers of funds and pension plans and insurance, Inverco and Unespa.
During the presentation of a report prepared by the Institute for Economic Studies (IEE) this week, the industry as a whole defended the need to use imagination to create plans adapted to segments such as innovative start-ups and technology-based companies, among others, in a context of greater boost to the digital economy as a result of the pandemic.
It is true that the sector supports the determination of the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, to promote occupational pension plans. But they make it clear that it should not be at the expense of individual plans, as the Executive intends.
For the financial industry, there is room for both systems. Moreover, it considers that their ‘coexistence’ is necessary to complement the public pension in a scenario in which, according to Inverco data, the current voluntary system of Spanish employment plans barely covers 10% of workers.
From the IEE they also defend that they should be complementary systems, especially in the context of the Spanish socio-labor framework, which, according to what they indicate, presents several characteristics that must be taken into account when designing any strategy for the extension of complementary social security.
Among others, the important role played by the self-employed and independent workers in the occupation, as well as the strong component of employed workers in small business units.
Factors to consider
“The consideration of these factors is very relevant because these groups have more difficulties in accessing solutions for joint savings schemes, such as employment plans, and, therefore, depend, to a large extent, on individual plan systems to implement their complementary social security ”.
For this reason, they consider it essential to also have a specific system that takes into account variations in the income of the self-employed. “In a complementary way, the promotion of employment plans would require the exclusion of the calculation of the contribution bases to Social Security, contributions to social security systems and reinstate the tax deduction in Corporation Tax for contributions to them “, they indicate.
It should be remembered that in 2006 a deduction of 10% was eliminated in Companies for these products.
The sector also advocates a mandatory system (or almost), similar to the british model, in which companies offer their employees the possibility of allocating part of their salary to a pension plan. Then, it is the worker himself who decides to stay or not. Since its implementation, more than 11 million workers have joined a product they did not have before.