Another blow for savers in individual pension plans. And maybe it’s the final one. The Government of Pedro Sánchez has returned to put the bar on the tax benefits of these financial products, which will foreseeably lower their maximum annual contribution to deduct in personal income tax from 2,000 euros to 1,500. Discourage the hiring of these to further incentivize employment plans. But the ‘pilot’ experience is not being entirely good, neither for some nor for others.
“New attack on savings.” This is what the General Council of the Associations of Insurance Mediators calls it, the first body to raise its voice against this measure. “Lowering the tax limit for individual savings in pension plans to 1,500 euros is another torpedo for freelancers and employees of SMEs. It favors the workers of large companies by punishing the rest, with special incidence in rural areas “, denounces the council.
In Spain, there are more than 8.5 million participants between individual pension plans and insured pension plans (PPA) that they will be directly and immediately affected by the measure for the second consecutive year, puts this body in context.
And, with this new offensive by the General State Budgets for 2022, it will be the second fiscal transfer from some private plans to others in two consecutive years. This is the first year, after the PGE of 2021, where the maximum contribution in individual plans is not 8,000 euros as before, but 2,000, while in business plans it is no longer 8,000, but 10,000.
For now, the figures are not giving the reason neither to Sánchez, nor to the Minister of Finance, María Jesús Montero, nor to the Minister of Social Security, José Luis Escrivá. The logical – and ideal – is that there would be more net contributions to employment plans than to individual ones, since now they have more tax incentives. Nothing could be further from the truth.
456% fewer tickets
Until June, individual plans had -193 million euros in net benefits, while business plans had -72.5 million of net outflows, with data from Inverco.
In the first case, the worsening has been drastic, with 250% less compared to the same period of the previous year. Then there were net contributions of 129 million even with the appearance of the Covid-19 crisis, after which the possibility of rescuing the money from individual plans was opened in case of unemployment due to ERTE or business cessation.
In 2021, the lower tax incentive has detracted interest on the part of Spaniards, dominating the benefits as expected by financial experts from banks, insurers, managers, employers and study bodies.
In the employment plans, the supposedly great beneficiaries of the reforms, things have not gotten better either. Money is also leaking, with 52.5% more net benefits, starting from the -47.5 million net outflows that already existed in the first half of the previous year.
In the overall of the three private pension systems, including the associated one, which is very small in volume, the Step back in these 12 months it has been 456%, from net inflows of more than 77.5 million to net outflows of practically -276 million.
Self-employed and SMEs, affected
For insurance intermediaries, “the individual system is irreplaceable for all the self-employed and workers of SMEs who cannot access the employment system because the reforms are not developed.”
Individual saving for retirement is “essential” in Spain given the structure of the labor market where more than three million people are included in the Special Scheme for Self-Employed Workers. It would be necessary to add several million more employees hired by SMEs, “a type of company that is outside the corporate social security plan and that, with this measure, is in frank inferiority”, adds the council.
All hope remains in the famous public ‘megafund’ for employment pensions, which aspires to capture 300,000 million euros – according to the Ministry of Escrivá – precisely from these groups, whose design and the open competition of the depository banks and managers involved must be convened.
As well as in a negotiation with large companies for a new tax structure with benefits in social contributions in the image and likeness of the United Kingdom, from which you want to copy your system automatic enrollment Or what is the same, mandatory enrollment by default, with the possibility of voluntarily leaving a posteriori.