The various reforms that have been carried out for some time to guarantee the sustainability of public pensions will lead to a reduction in the replacement rate (it is estimated that we could lower the current 80% to 50% coverage of the last salary before retirement). For this reason, from all spheres, including the Government, they are reiterating the idea that public pensions must be supplemented to guarantee sufficient income for retirement.
This represents a very large paradigm shift, especially for people with incomes below 37,900 euros (maximum public pension ceiling), who to date did not consider it necessary to save for retirement given that they were already sufficiently covered with the public pension. It will not be easy to change the chip, when our subconscious has traditionally preferred immediate retribution over deferred and savings in real estate over financial , and also the economic crisis derived from the coronavirus does not help to generate the necessary monetary surpluses.
Of the two existing ways to complement the public pension , individual savings and those promoted through business , the latter is the one that, in my opinion, should be promoted.
Since the pension plans and funds law was published in 1987, the development of employment plans (those promoted by companies) has been lower than expected , having focused mainly on large companies, in such a way that it has been achieved that a significant part of its workers are covered for retirement by a pension plan or, where appropriate, an insurance contract.
However, reality has been stubborn for 40 years and we continue to see that the level of development of social security in SMEs continues to be anecdotal . It has been argued that this is due to low demand from workers, the technical complexity of savings products and the high administrative burden. These arguments can no longer serve as an excuse: we must guarantee an adequate income for retirement.
In this sense, recommendation 16 of the Toledo Pact agreement already indicates that employment plans must be promoted and that they should be carried out through collective bargaining.
I am convinced that the best way to extend coverage to the infinity of SMEs that we have in our country is by promoting sectoral pension plans, to which they can join. In this way, administrative procedures would be simplified and the commissions charged by managers would be reduced by concentrating investments in a few pension funds.
This is a model that has already been shown to work in our country. A clear case of success is Geroa EPSV, a non-profit social welfare entity that manages the retirement savings of the workers of 8,560 Gipuzkoan companies in twenty different sectors, which is obtaining notable returns with transparent management.
But for there to really be a qualitative leap in employment plans, it is essential that social agents clearly support it and that politicians approve legislative measures that encourage them.
The Government , aware of this, has wanted to take the first step by proposing to establish macro-funds for public pensions and to regulate simplified models for the integration of plans. Its objective is to reduce administrative obstacles and lower commissions by stimulating competition. This is a good idea, as long as companies and workers have the freedom to choose between public or private funds.
However, the key will be in the role that employers and unions will play. We must flee from demagogies. Of course, the public pension system must be preserved , but this does not mean not promoting private saving. In order for workers to have a decent pension, it is necessary to supplement it through company plans and, in addition, it is convenient that the savings take place from the beginning of their professional careers. It may be a good time to negotiate the replacement of retirement or loyalty awards and other social benefits existing in collective agreements for contributions to pension plans.
If the path of collective bargaining did not give the necessary impulse, it would always be possible that politicians would decide to implement a model similar to the British one, with automatic affiliation. It is a social security system to which the company and the worker contribute, in which the latter, although this is automatically assigned by default, can decide to leave. It is precisely the application of principles of behavioral economics that has produced a high participation of workers, completely changing attitudes towards saving. By the way, this system has a large pension fund, called NEST, managed non-profit, under public tutelage, to which company plans can join. Something similar to what our Government has proposed with macro-funds.
In short, it is essential to put in place the appropriate mechanisms so that, between public and private pensions, workers are guaranteed a reasonable standard of living after retirement. There are numerous successful experiences in our immediate environment, so it is not necessary to invent anything new. You just have to have the will. What are we waiting for?