"Challenges and Opportunities in Complementary Social Security in Spain"

Supplementary social security in Spain faces a significant challenge: the low penetration of these systems compared to other European countries. Despite efforts made over the years to promote a culture of long-term savings, many companies and workers still lack awareness of the advantages of opting for employment pension plans (PPE). In this context, Loreto Mutua, with over 50 years of experience, positions itself as a benchmark in social security management, offering solutions tailored to the needs of workers, as explained by its General Director, Jon Aramburu. Although Mutualidad Loreto began its journey managing voluntary social security for Iberia employees, its model has evolved and diversified to encompass a wide range of professionals. "We have demonstrated that a solid and well-managed model can positively impact the quality of life for retirees," asserts Aramburu, who highlights the importance of PPE as a key tool for companies, which are still relatively unknown within the Spanish business fabric, where only 25% of companies have a pension plan for their employees. Despite this low implementation, a growth in the adoption of these plans has begun to be observed. During the first half of 2024, nearly 600,000 new participants in PPE were registered, indicating a shift towards greater awareness of the importance of securing a dignified retirement. In this regard, the figures from Mutualidad Loreto, which complement the average public pension of 1,259 euros, underscore the need for additional savings to ensure financial stability in retirement. One of the most significant obstacles facing supplementary social security is the lack of incentives and the confusion surrounding these products. Regulatory barriers, along with widespread ignorance of their benefits, have limited their development in the country. To improve this situation, the implementation of clear tax incentives is suggested, including an enhancement of the tax treatment of benefits for employees and participants, as well as the obligation of contributions from both companies and workers. Loreto Mutua advocates for a more favorable regulatory framework that facilitates the expansion of PPE as an essential complement to the public pension system. Aramburu emphasizes the importance of equating Mutualities with Voluntary Social Security Entities (EPSV) and Employment Pension Plans, thereby eliminating the existing tax disparities, as they offer a similar service. This equivalence could incentivize the creation of more plans and increase worker participation in them. Education and communication about pensions are equally crucial. Loreto Mutua urges administrations to strengthen the educational aspects related to social security, as greater information can motivate workers to seek supplementary solutions. "It is essential that both workers and employers understand the importance of PPE in ensuring a secure financial future," notes Aramburu. The figure of Jon Aldecoa, a consultant and thinker in the field of pensions, has left a profound mark on the sector, promoting not only supplementary pensions but also socially responsible investment (SRI) and environmental, social, and governance (ESG) criteria. In his honor, Loreto Mutua established the Jon Aldecoa awards four years ago, recognizing best practices in social security and sustainability, which this year have been awarded to Nicholas Barr, a renowned academic in the field of social security economics. Upon receiving the award, Barr emphasized the need for appropriate regulation to achieve the sustainability of pension systems, as well as the importance of financial education. "My life has been guided by a passion for teaching," he commented, underscoring that education is a fundamental pillar for developing a culture of savings and foresight in society. Supplementary social security not only represents a solution to the problems of the pension system in Spain but can also improve the quality of life for millions of workers in their retirement. With the support of entities like Loreto Mutua, a path towards a safer and more stable future for the next generations is opening up, provided that appropriate policies are implemented and a long-term savings culture is fostered. Thus, Spain could progress towards a more sustainable and equitable pension system, where both employers and employees work hand in hand to ensure a solid financial future.