The first half of this year has been the worst for individual pension plans since 2017 in terms of fundraising. The participants of these vehicles have withdrawn 193 million euros between January and June, according to the latest data available in Inverco, coinciding with the entry into force of the cut in tax incentives enjoyed by these short-term savings vehicles.
These net reimbursements contrast with the 129 million they captured in the same period of 2020, the year in which the Government announced that it would reduce the maximum amount that a participant can deduct with their private pension plan, from 8,000 to 2,000 euros .
Even so, the equity of these products has continued to grow thanks to the revaluation of their assets, and is already in an area of historical maximums, reaching 86.2 billion euros, 9.7 billion more than at the end of last year. \
The good performance of these vehicles, which achieved an average profitability of 11% in the last year, thanks to the positive tone that the market has maintained in recent months, as greater economic growth was discounted thanks to the progress in the sales campaigns. vaccination, has not prevented private pension plans from registering the largest money outflows since 2017, when participants withdrew a similar amount (198 million euros). That year, after Donald Trump’s victory as president of the United States just a few months earlier, in November 2016,
The final stretch of the year … key
The truth is that, except for last year, the first semesters of recent years have been characterized by being weak in terms of deposits (see graph). The key to measuring the impact of the government’s fiscal hack on pension plans will be found in what happens in the final stretch of the year, which is when contributions to these savings vehicles are concentrated despite the fact that experts insist on the error that this supposes instead of systematizing the contributions.
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.
To match the net subscriptions of 2020, which were 1,300 million euros, private pension plans must capture around 1,500 million euros in the next six months. However, the lowering of the maximum deductible amount, from 8,000 to 2,000 euros, will make this task difficult, since 7% of the participants contributed more than 2,000 euros, according to the Statistical Report on Complementary Social Security Instruments of the Ministry of Economy of 2018. (see graph), since these are the ones that really increase the total contributions to the system since 67.4% of Spaniards did not contribute even one euro to their plan.
Inverco has proposed to the committee of experts for the tax reform to increase the contribution limit of individual pension plans to 5,000 euros from the current 2,000. The employers insist that, with data from 2019, increasing the limit would not have a significant budgetary effect and would allow, however, “to incorporate into the group covered by the contribution limits almost 30% of 2020 contributors”, largely autonomous, for those who consider this issue “crucial”.
More benefits for those in employment
At the same time that the Government made private pension plans less attractive, it tried to raise that of company plans, increasing the deductible amount to 10,000 euros between the two products. The problem is that, today, business plans are not widely established in Spain and their access is limited.
Among the Executive’s plans was also the creation of a public one , to which companies and workers could adhere, which, however, has not yet been launched and which will prevent those who do not benefit from the deduction of up to 10,000 euros, therefore, already have a plan in your company.
From Inverco they ask for a deduction of 10% in Corporation Tax for contributions to pension plans of their workers and exemption with possible compensation via taxes based on Social Security contributions. To this request are added other claims, such as new tax incentives for companies, the non-limitation of the worker’s contribution to the plan, the establishment of a default contribution system and that contributions to employment systems are only consolidable if the worker retires at legal age.
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