Rains, it pours. The new fiscal blow to the pension plans of the individual system comes at a time when these finalist savings products have seen 231 million euros come out between January and September, according to the latest data published yesterday by Inverco -that is, the data It does not even include the impact that the new reduction in the deductible amount in personal income tax, from 2,000 euros per year to 1,500, that the Government collects in the General State Budgets for 2022- will have. For now, the previous reduction, from 8,000 to 2,000 euros, announced last year and which has come into force in this year, has already caused the individual system pension plans to experience their worst year to date since 2016, when in the same period they left 313 million.
The industry has already quantified what will be the consequence of the latest fiscal hack. According to a statement issued on Wednesday by Inverco, Unespa and the Spanish Confederation of Mutualities (CEM), in which they advocate increasing the tax limit of individual savings for retirement, contributions to individual systems will be reduced by 40% this year. Which means that, if 1,335 million euros entered last year, in this year the entries would be limited to around 530 million euros. If expectations are met, this would be the worst year for these savings vehicles since 2013.
What happens in the final stretch of the year will be key, since it is when the contributions to these savings vehicles are concentrated despite the fact that the experts insist on the error that this implies instead of systematizing the contributions. Traditionally, it is also from September when financial institutions start their campaigns to encourage subscriptions. For two consecutive years -2019 and 2020-, these vehicles have managed to attract more than 1,000 million euros throughout the year. And, in both, it was in December when the definitive boost in terms of contributions took place.
“The reform proposed by the Government is going to have unwanted effects, as is already being observed with the one that was approved last year. With the new limits, the amount of savings that could be accumulated within the individual system will be clearly insufficient” Inverco, Unespa and CEM state, who estimate that the new reduction harms 1.2 million workers. “At a rate of 1,500 euros per year, a worker could accumulate 60,000 euros if he systematically saves during 40 years of professional trajectory, plus the profitability obtained by this money. If this amount is prorated during the 20 years of life expectancy that remain from that Once the worker reaches retirement age, the result is an average monthly amount that will hardly be used to supplement the worker’s public pension, “they denounce.
Difficult access to employment
As it did last year, at the same time that the government made private pension plans less attractive, it has raised that of company plans, despite the fact that experts insist that both products “are not communicating vessels.” It has done so by increasing the deductible amount from 8,000 to 8,500 euros -which raises the amount to be deducted between both products to 10,500 euros-.
The problem is that, today, business plans are not widely established in Spain and their access is limited. Among the Executive’s plans is also to create a public employment plan, to which companies and workers, including the self-employed, can adhere, which, however, has not yet been implemented and which, therefore, will prevent them from benefiting from the deduction of up to 10,500 euros for those who do not already have a plan in their company.
It should be taken into account that the number of workers who have an employment plan is below 2 million (something that has not happened since 2009). Specifically, at 1.95 million. Seen from another perspective, it means that only one in ten workers in Spain benefits from one. Even so, 67% do not make any contribution to their business plan, according to the latest data available in the 2019 Statistical Report on Complementary Social Welfare Instruments of the Ministry of the Economy.
In those of the individual system, something similar happens in terms of contributions, 67% of the participants did not put up a single euro and only around 13.6% allocate more than 2,000 euros.
However, the big difference is that the bulk of what has been saved in personal pension plans in order to complement the public pension in the future is found in private ones and not in company ones.
The heritage, at maximum
Despite the drop that is taking place in contributions, the equity of private plans has continued to grow thanks to the revaluation of their assets, favored by the good performance of the market until September, when volatility did reappear, and It is now in an area of historical maximums, reaching 86,570 million euros.
Compared to that amount, the amount saved in business plans is 36,900 million euros, according to Inverco data, at the end of the first half of the year – a figure that is also at maximum for the same reason as in the case of individual system plans.
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