A few weeks ago, we read a very interesting article in the newspaper El País, which stated that the high fees charged on pension schemes The article was a long and somewhat complex article, and we would like to summarise some of the points. We would like to summarise a few points as it was quite a long and somewhat complex article.
Tax reform 2015
The truth is that, at the end of 2014, reforms were carried out to the limiting maximum commissions eligible in pension funds (and which came into force in 2015). Why was this done? Because they were considered abusive, at the same time as they reduce the profitability of these products, which also limits the growth of potential savers.
What was the reform like?
- The commission that could be charged by the managing bodies (who decide how members' money is invested), dropped from 2% to a maximum of 1.5%. (2018 review: they have been lowered further, to 0.85-1.5% depending on the type of plan).
- The depository institutions of pension funds, also saw their fees reduced from 0.5% to maximum 0.25% (2018 revision: down to 0.2%).
However, as experts in the field say, instead of interpreting the reform as a sign that things were not being done well, the institutions have simply stuck to these maximums. One fact is lapidary: the 10 pension plans in Spain with the most participants charge the maximum commissions.
Reform objectives
What public bodies are aiming for is a real competition between entities, In the same way as with investment funds, in order for it to trigger:
- Greater transparency
- Reduction of commissions
- Improving performance in the performance of pension schemes
All these comments come from the difficulty that exists today to improve the Social Security situation, which ultimately determines the payment of pensions. The fact is that the lack of encouragement for private savings in Spain means that we are used to relying on the welfare state and having a high pension, but the outlook is not the best.
In this respect, the figures are clear: private pension funds account for little more than 100 billion euros, which translates into less than €9,000 per account. This means one third of the EU average as a percentage of GDP.
If you want to get improving your retirement pension with pension plans that really make your investment profitable, call or write to us, and our Savings and Investment Department will help you choose it.
