Spaniards have been dragging a pending issue for decades that the pension reform, whose first phase has come into force this year, will not help to approve: increase long-term savings for retirement.
This has been stated by Gonzalo Núñez, professor at UDIMA and partner-director of Bardají Honrado, in a podcast on Finanzas.com.
He considers that one of the main problems that Spain has with regard to pensions is the low final savings rate, which only represents 7 percent of GDP, while in neighboring countries it reaches one hundred percent.
Faced with this difference, the Government is not taking effective measures to promote this saving, quite the opposite, it puts restrictions.
One of them, in the opinion of Gonzalo Núñez, has been the reduction in tax incentives for individual pension plans: “Reducing these incentives to the point of practically disappearing has not been a very good idea.”
In two years, the Ministry of Social Security has reduced the limit of contributions to individual plans with the right to relief in personal income tax from 8,000 to 1,500 euros.
A highly contested macro-fund
One measure with which the Government wants to increase finalist savings is the creation of a public employment pension macro fund that it hopes to present this year and that, in the opinion of the Udima professor, poses several problems.
The first refers to the fact that the Government has ‘punished’ individual plans without the macro-fund being operational and the second derives from the fact that the business structure in Spain is made up of 96 percent of SMEs and micro-SMEs without sufficient capacity to promote employment pension funds.
“Most of these companies are not willing to create employment plans for their workers. In addition, a large part do not have collective agreements, they are governed by sectoral agreements and, as has been seen so far, the unions prefer salary increases to pension plans”, he argues.
Savers move into funds
Another consequence of the thrust given by the Government to the tax benefits of individual pension plans is that they have lost their attractiveness for savers and are directing that capital towards investment funds.
Gonzalo Núñez argues that the funds are capturing a large part of the savings in pension plans because “they are a good option.”