The Ministry of Inclusion, Social Security and Migration has designed a new model of pension plan so that this savings figure reaches more citizens, including the self-employed and SME workers. The draft bill prepared by the ministry includes several requirements for managers who want to choose to manage this new type of vehicle. The main barrier to entry will be size. They must prove that they manage at least 1,000 million euros in retirement products, something that leaves most firms out. So only 22 entities will be able to apply to manage these funds.
The management companies that pass the cut can lend themselves to the creation of “public promotion pension funds ”(FPPP), as called by the draft in which the department directed by José Luis Escrivá is working.
In parallel, companies included in sectoral agreements, public administrations and bodies and associations of the self-employed, professional associations and mutual benefit societies may promote the creation of simplified pension plans, which will adhere to the aforementioned FPPP.
It will be an organism dependent on Social Security, the Promoting and Monitoring Commission, made up of five ministry officials, who will approve the proposals for the creation of these new employment plans. After, its evolution will be supervised by another newly created body, the Special Control Commission, made up of 17 experts, nine of them appointed by the ministry, four by the unions and four by the employer).
Where will the plans invest?
- Responsible investment. FPPP investments will always be made in the interest of the participant. However, the ministry wants the investment process to be carried out taking into account environmental, social and good corporate governance criteria, a trend increasingly incorporated in the asset management industry.
- Cost effectiveness. In managing financial risks “an adequate weighting of profitability and incurred risk will be taken into account.” In addition, an attempt will be made to encourage younger participants to incur greater risks while those closer to retirement age have a more conservative portfolio.
- Sustainable finance. Social Security wants the new public promotion pension funds to contribute “to financing energy transformations and promoting social innovation in aspects as relevant as social housing, microcredits or control of the supply chain.”
- Secondment. Simplified plans may be assigned to pension funds of different managers and orientations “to better adapt to the life cycle of the participant”.
Who promotes the plans?
The initial promotion of the simplified pension plans It will be in charge of the negotiation tables of collective agreements (for companies and SMEs), of the negotiation tables of the public administration or of professional associations, mutuals or associations of the self-employed. The commission promoting the plan must present it to the powerful Special Control Commission indicating in which FPPP it wants to join. A single plan could adhere to multiple funds. Each of the new simplified employment plans may in turn have a control committee where companies and workers will be represented, or the self-employed, as the case may be.
For the selection of the managers in charge of managing the new FPPPs, the Ministry of Social Security will convene, every three years, an open procedure respecting the principles of “equality, transparency and free competition”. The ministry will set the profile and number of these pension funds, depending on the needs and always prioritizing efficiency.
Minimum volume
The pension plan managers who present themselves will have to already manage a volume of at least € 1 billion in pension plans. This would include banks (CaixaBank, Santander, BBVA, Sabadell, Kutxabank, Ibercaja, Abanca and Renta 4 Banco); insurers such as Mapfre and Santalucía; independent firms such as Bestinver; credit cooperatives such as Caja Rural and Cajamar, and foreign groups, such as National Nederlanden, Deutsche Zurich Pensiones or Caser (now owned by the Swiss group Helvetia).
The five largest social welfare mutuals will also be able to make their proposals for publicly promoted pension funds: Mutualidad de la Abogacía, the National Brotherhood of Architects; the Bank of Spain Employee Mutual Fund, Loreto Mutua (for pilots and air personnel) and PSN (for doctors and other university graduates).
The largest entities (more than 3,000 million euros, 10 of the 22) may submit up to three FPPP projects and the medium-sized (between 1,000 and 3,000 million) may only submit two. So, assuming all firms were maxed out, there would be 54 FPPPs.. In FPPP proposals, the manager must go hand in hand with a depository entity.
The maximum commission that the manager may apply will be 0.4% per year, and the depository 0.1% per year.
“We do not understand that entry barriers have been put in place due to the volume of assets managed. The low limit on commissions is already a very strong barrier. The ministry should leave more freedom for small plan managers to apply, if it compensates them at those prices, “explain sources in the sector.
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