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HomeLatest NewsThe PP will equalize the advantages of employment and individual pension plans

The PP will equalize the advantages of employment and individual pension plans

Date: September 29, 2023 Time: 10:11:41

The sustainability of the public pension system will be the great challenge facing the country in the next two decades, a problem to which the social agents and the Government have sought to find a solution through the latest pension reform. However, the main political actors seem to agree on the importance of promoting private savings, to have a system at the time of accessing retirement. However, the two main parties disagree on how to do it. José Luis Escrivá has made a firm commitment to collective pension plans, to the detriment of individual ones, a movement that the Popular Party understands to be wrong.

Economic sources of the ‘popular’ transfer to La Información that the “logical” thing is to equip the maximum contributions to employment or individual pension plans that are deductible in the income statement. This means giving a 180º turn to the approach of the current Minister of Inclusion, Social Security and Migrations. With the aim of promoting pension plans that could be developed by sectors, companies or the administration, Escrivá raised the exempt limit for employment plans to 8,500 euros, while it reduced the maximum for contributions to pension plans to 1,500 individual, when in 2020 this amounted to 8,000 euros.

If Alberto Núñez Feijóo agrees to Moncloa, he will seek to promote private savings through both modalities, instead of practically retiring to individual private plans, as the current Government has done. This measure is not included in the economic program presented by the president of the PP and the spokesperson for the parliamentary group in the Congress of Deputies, Cuca Gamarra, this Monday. However, the list of initiatives does include his desire to “protect savings, investment and promote job creation” through a “comprehensive reform of the tax system” based on criteria of efficiency, equity and sustainability of public services. , according to objective 42.

Individual pension plans are, today, the most solid alternative for pension savings, since the first construction sector employment plan has just begun to be developed and public promotion plans will be available, at the earliest, by the end of the year. Escrivá decided to favor them after verifying that the banks were covering the benefit reported to the clients of these planes with the commissions, which at times were close to 3% and now its delivery finalizes the necessary regulations to start them up, while it resolves the tender for assign its deposit and management to five financial firms. The call for early elections has accelerated these deadlines, but the Government seems determined to resolve it before the electoral appointment on July 23.

They rule out applying the Austrian backpack

Regardless of the requirements are the incentives to private savings, the next government will have to face the examination of the Independent Authority for Fiscal Responsibility scheduled for 2025 on the public pension system, with which it will have to evaluate if the income system conformed in the Last reform is enough to cover a growing expense. The PP avoids rushing in this direction and insists that if it becomes president of the Government, it will consult the real state of the accounts and the position of the social agents before preparing a reform proposal. However, Feijóo has already announced that he would request the body headed by Cristina Herrero to advance this evaluation to 2023, to start this consideration.

Sources close to the economic manager of the center-right party maintain that they are not convinced by either of the two routes proposed in the reform as a ‘patch’ to the accounts: raising the contribution of workers or “another alternative formula to increase income or a reduction of spending”, as reflected in the text approved in March 2023. However, he does not believe that the solution is known as the ‘Austrian backpack’, an individual plan that the worker transfers when changing companies and which he can make use of in the event of being fired, to meet your daily expenses in the event that the compensation is not sufficient for this purpose.

Instead, they propose developing a new “flexibility tool”, as reflected in the program entitled ‘A project at the service of a great country’. The mechanism is similar to the model originating in Austria: it is based on monthly contributions made by companies to an individual account of the worker that will accompany him during his working life. However, it presents a substantial difference, it is designed so that it can be used before the “various contingencies of your working life to gain equity, efficiency and productivity”, even if the worker voluntarily leaves a job. At least, the most senior workers who decided to resign would rise to do so.

The Popular Party proposes that this tool be nourished by the contributions made by the employing entity, however, it does not consider increasing the “contributions” to sustain purchasing power for retirement, but rather proposes dividing the contributions that are currently made, so that a part of the social contributions that they already pay will go to this individual account. For the moment, the political formation has not given more details in this regard, but this cut in the income route of the ‘pension piggy bank’ could condition the viability of the system and presumably translate into a reduction in the amount of public pensions , in pursuit of private contribution.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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