18 associations advocate maintaining the current tax limit on individual savings for retirement


The Draft Law on General State Budgets For the year 2021, the annual contribution limits to individual social security systems and also to those of the spouse are reduced from 8,000 euros to 2,000 euros. This will negatively affect all citizens and, especially, the self-employed.

18 business and professional associations consider that the current treatment of individual supplementary social security savings instruments should be maintained. The signatories of this joint manifesto are ADECOSE, AEB, AEDAF, AMAEF, ASCRI, ATA, CECA, CEOE, CEPYME, the Spanish Confederation of Mutualities, the General Council of Associations of Mediators, FECOR, the Institute of Spanish Actuaries, the Institute of Economic Studies, INVERCO, OCOPEN, UNACC and UNESPA.

In Spain there are more than 7.5 million participants in individual pension plans and almost 1 million insured in insured pension plans (PPA) who are going to be directly and immediately affected by the measure. Many of them are self-employed or employees of SMEs.

In the opinion of the signatory entities, the commendable intention of the Government to promote complementary social security in the business field in Spain should not be carried out at the expense of the savings that individuals use to reinforce their future pension.

Individual saving for retirement is necessary for several reasons. The first of these is the structure of the Spanish labor market. The establishment of different contribution limits to social security systems, relegating individual systems that would have a notoriously lower limit, is discriminatory for the vast majority of the Spanish employed population. It would especially affect the more than 3.2 million people attached to the Special Regime for Self-Employed Workers (RETA) of Social Security; as well as to the employees of SMEs, in which collective savings are barely present. It must be possible for all this employed population that is outside the corporate social security system to access individual pension systems under the same conditions and requirements as any other worker.

The individual system will continue to be necessary and essential for all those who, such as the self-employed or workers of SMEs, cannot access the employment system because the reforms are not developed.

The second reason why the reform proposed by the Government may have unwanted effects is the insufficient amount of savings that could be accumulated within the individual system under the new parameters. At a rate of 2,000 euros per year, a worker who does not have access to an employment plan could accumulate 80,000 euros if he systematically saves during 40 years of professional experience, plus the profitability obtained from this money. If this amount is prorated over the remaining 20 years of life expectancy after reaching retirement age, the result is an insufficient average monthly amount to supplement the public pension.

A third element to keep in mind is the irregularity of earnings from work. Economic crises are cyclical phenomena and materialize several times throughout people's working lives, as the experience of the first two decades of the 21st century shows. For this reason, workers, especially those who are self-employed, should be allowed to regain their ability to save for retirement in the years when their income is stable. The annual limits of contributions to social security systems should be abolished instead of being reduced and replaced by a global limit of contributions accumulated throughout the working life, in such a way that savings for retirement can be generated depending on the situation of each worker during their socio-labor trajectory.

International experience should be a reference in which Spain should be looked at. In practically all the countries of the European Union (EU) and the Organization for Economic Cooperation and Development (OECD) there are tax incentives for savings and additional tax incentives are granted for the promotion and development of social security systems, both business as individuals. The drastic reduction of the taxation of individual systems in Spain would contravene the clear international and European tendency to stimulate them.

Finally, from the point of view of the Public Treasury, the taxation of social security systems is a mere deferral of taxation. In other words, its tax treatment does not generate benefits. The reduction in the tax base of the Personal Income Tax (IRPF) of the contributions is compensated later with the taxation as work performance of the benefits. Therefore, any measure aimed at reducing tax deductions for contributions to individual instruments of complementary social security will now lead to a reduction in the State's tax revenue in the medium and long term.



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