Pension reforms require better pension planning

Increasing longevity and reducing public pensions forces us to plan better income after retirement. This was the main conclusion of the experts at the forum organized by LaInformacion.com “The need for long-term savings planning”. The meeting was moderated Cristina TrianaDeputy Director of Information intervened Jose Carlos Vizarraga, director of Ibercaja Pensión; Inmaculada Domínguez Fabián, doctor of economic and business sciences and professor at the University of Extremadura; and David Same, co-founder and COO of Pensium.

Jose Carlos Vizarraga, of Pension Ibercajahe emphasized how important it is for citizens to start saving “as soon as possible and with regular contributions”, to get into the habit from a young age, keeping in mind that “every amount is good, no matter how small”. Furthermore, he explained the multiple financial and complementary social welfare mechanisms that exist in the market for this, including pension plans and future employment plans, and emphasized the need for advice and for private entities and public administration to help promote financial planning. “From the moment any person starts working and has an income, it is convenient for them to allocate some of it to savings, to create a legacy that compensates for the lower nominal income they will receive after retirement and the greater number of years they are likely to live.”

Changes in pensions

Inmaculada Domínguez from the University of Extremadura began by clarifying that there was no doubt about the future sustainability of social security, but added that it would happen “reduction in the amount of public pensions, which will require greater planning of savings and social security”. He also agreed with the rest of the experts that “information and education are the fundamental pillars that We must promote the entire life cycle of contributors and pensioners”.

He recalled that the latest reforms of the pension system in Spain delayed retirement from 65 to 67 years (unless 38.6 contributors are added), and to calculate 100% of the regulatory base, 38.5 years are also needed. Therefore, “the effort required of us now to get the same as before 2011. when the most profound changes in the system have taken place, this means more years of contributions and later retirement; and if that is not feasible, will reduce our pension.” In addition, the formula for calculating the pension was also progressively changed, “from taking into account only the last two years of working life (in the eighties of the last century), to the last 15, currently 25, and eventually expanding to 30 (from the best 28), which are currently considers.

David Igual, from Penzium, asserted that citizens, in the context of the increasing longevity of the population and lower incomes after retirement, should “use all the assets they own, not only financial but also real estate, to face the new stage”. And he assured that, in this sense, “a whole new line of products will come to the market to meet these future needs.” He said, “In the last decade, life expectancy increased by 4 years, and every year it increases by 2 and a half months more. People who are now 65 years old have a future horizon of more than 20 years. At the beginning of this century, there were 3,500 Spaniards over 100 years old, and in 2049 there could be 65,000. “And that is that the life expectancy of those who are born now will be a hundred years.”

employment plans

The participants of the LaInformacion.com forum analyzed different scenarios and population groups and agreed that it is necessary to find specific solutions for each of them. José Carlos Vizárraga specifically defended the employment pension plans, which “represent a good formula for assistance large mass of workers to engage in long-term savings”. He also mentioned the possibility offered by “many other financial products to which we can allocate part of our income every month”. He also referred to new initiatives appearing in the market, such as Ibercaja’s proposal in the Sandbox with Pensumo, a platform that connects user purchases with retirement savings. “It is a formula for people of any age that allows retailers to build customer loyalty while helping to encourage savings”.

Either with this formula or that, flawless dominguez he insisted on the importance of young people “starting to save as soon as possible, setting aside fixed and periodic amounts for this, so that this action would be soon become a habit. On the other hand, he advocated the continued promotion of fiscal incentives in pension plans.

While David Igual highlighted the need to resort to real estate as an alternative because, for example, 90% of those over 80 years old own a home, “which they should consider as an asset that can give them profitability and help pay for their management or rental needs”. In Pensium ” we manage these homes for them and rent them out to help them pay for the costs that they can’t cover with a pension, which can range from admission to a residential center to special care.”

mixed products

The round table also analyzed the movement of interest rates. The director of Ibercaja Pensión explained that this is a matter of particular concern to insurance companies, which traditionally promote savings in the long term through life savings insurance and lifetime annuities, some products that need positive returns on their fixed income investments and have fallen on hard times in recent years, but whose situation is now starting to improve. “Annuities, which were dormant during this time, are some very important tax exceptions are also very interesting now”.

New perspectives will improve the position of savers, according to the co-founder of Pensium, because until now the cost of living has been increasing, but money has not been compensated and it has increasingly lost its purchasing power. “Now it seems that this situation will improve”. In addition, according to this expert’s opinion, the new stage that is starting will be characterized by a new generation of products “which They will include both financial and real estate elements.”

Finally, the Doctor of Economic and Business Sciences, Inmaculada Domínguez Fabián, pointed out that we are facing a changing scenario, full of new challenges, which requires more innovation and more expert advice for savers. “And not only during the contribution periodbut in all life stages of his life”.

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