Pension funds have accumulated three consecutive years of net outflows, in which withdrawals of funds have been greater than contributions, according to data offered this Thursday by the association of collective investment institutions Inverco in a meeting with the press.
The cause of this setback is, as explained by the president of Inverco, Ángel Martínez-Aldama, in the reduction of tax incentives for individual plans by the Government, which prioritized collective systems in the previous legislature to the detriment of individual.
Since at least 2014, there has always been more money coming into the funds than coming out. It was in 2021 when the change in trend occurred, with a negative gap of 117 million euros. The problem is that the decline increased in 2022, up to 666 million, and has done so again in 2023, reaching 814 million.
“Pension funds have always had a great advantage over deposits: taxation,” warned Joseba Orueta, vice president of the association. As the incentive reduces, so does the interest of savers, which damages retirement provision models, warns the association.
In 2020, the annual gross contributions to individual pension plans were 4,314 million euros. That year was the last in which tax reductions could be enjoyed for the first 8,000 euros saved. In 2021, the limit was reduced to 2,000 euros and contributions fell by 40%, to 2,560 million. From 2022, the figure was reduced again, to 1,500 euros, and the savings captured fell first to 1,710 million and then, in 2023, to 1,548 million.
“We ask that the limit of contributions to individual plans be increased, that the obligation to negotiate pension plans be established when collective agreements expire and that there be a fiscal stimulus so that the plane starts flying,” stated Inverco directors.
The apparent paradox is that pension funds have binged on profitability this year, 8.8%, higher than Treasury bills or inflation itself. “40% is invested in variable income and the rest in fixed income, and both have performed well this year,” Orueta explained.
This profitability is the highest since Inverco has records, only equaled by that of 2019. It also contrasts with the decline in 2022, of 9.7%, when this investment suffered its largest decline in two decades. “Patience must be a virtue,” said the president of the association.
The rebound in profitability meant that, despite the withdrawals of contributions, the assets of the pension funds stood at 122,385 million euros last year, 7.4% more than the previous year. The improvement, Inverco insists, is due to revaluation and not to the greater interest of savers.
Individual systems total 84,923 million, 8.1% more, while employment systems continue to be a much lower figure, 36,670 million, 5.9% more.
