Changes in the taxation of individual savings plans for retirement continue to cause blisters in the sector. The Draft Law of General State Budgets for 2021 prepared by the Government reduction of annual contribution limits from 8,000 euros to 2,000 euros to these savings systems and also those carried out in favor of the spouse, from 2,500 to 1,000 euros, and that has led more than twenty academics, university professors and business associations to demand that it be back to the extent.
The last to speak out against this change have been 21 academics who have signed a joint manifesto to demand “the maintenance of the current treatment of individual retirement savings systems”. In his opinion, the Executive’s proposal to promote pension systems in the business sphere should not be carried out by drastically reducing the ability of individuals to use their savings voluntarily to reinforce their future pensions.
According to their figures, in Spain there are more than 7.5 million participants in individual pension plans and almost 1 million policyholders in insurance plans (PPA) that are going to be directly and immediately affected by the measure. Many of them are self-employed or employees of SMEs.
Among the professors who sign the document are names such as that of Mercedes Ayuso Gutiàrrez, Professor of Actuarial Statistics at the University of Barcelona, Santiago Carbo Valverde, Professor at the University of Fundamentals of Economic Analysis at the University of Granada, Rafael Domànech Vilariño, Professor of Economic Analysis at the University of Valencia or Josà Antonio Herce San Miguel, founding partner of Longevity & Retirement Income Solutions (LORIS).
Their voices are added to that of almost twenty organizations that have also made clear their dissatisfaction with the fiscal change in the next Budgets. Specific, ADECOSE, AEB, AEDAF, AMAEF, ASCRI, ATA, CECA, CEOE, CEPYME, the Spanish Confederation of Mutual Societies, the General Council of Associations of Mediators, FECOR, the Institute of Spanish Actuaries, the Institute of Economic Studies, INVERCO, OCOPEN, UNACC and UNESPA.
Both parties defend individual savings and argue in their respective statements that it is an “essential” option due to the structure of the Spanish labor market, since it would be “discriminatory for the vast majority of the employed population” and “would affect especially to the more than 3.2 million members of the Special Regime for Self-Employed Workers (RETA), as well as to employed persons, especially SMEs, in which collective savings are barely present (approximately , 4.3 million workers).
Linked to this, they consider that irregularity of earned income in Spain they also make this type of plan an interesting complement to pensions. However, discouraging them detracts from their appeal and benefits. “Economic crises are cyclical phenomena and materialize several times throughout the working life. For this reason, workers, especially the self-employed, must be allowed to regain their ability to save for retirement in the years in which who have stability in their income “.
In addition, they believe that the new limit would generate insufficient savings for the future – “At a rate of 2,000 euros per year, a worker or self-employed person could accumulate 80,000 euros if he saved during 35 years of professional career, plus the profitability obtained from this money. Taking into account this amount during the 20 years Life expectancy once the retirement age is reached, the result would be clearly insufficient to complement the public pension and guarantee an adequate total income “- and that goes against the European and international tendency to stimulate them.
Economists and academics, together with associations, also defend that the tax treatment of pension plans as it was until now does not generate benefits, but rather represents a deferral of taxation. “The reduction in the taxable income of the personal income tax of the contributions is later offset with the taxation as work performance of the benefits. Therefore, any measure aimed at reducing now the tax deductions for contributions will result in a reduction of the state’s fiscal income in the medium and long term, “they say.
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