Spain/Portugal reform pensions law
Spain’s long-awaited reform obliging company pension reserves to be switched into funded retirement plans is finally expected to be ratified by parliament on September 15.
The new law, which could see around Pts3trn (e19bn) in assets flow into the hands of money managers has been approved by ministers, but is still pending a final government sanction at the beginning of the new parliamentary session.
Edoardo Oreja, senior actuary at Milan-based consultant Aserplan, part of Woodrow Milliman, comments: “We are expecting many changes under the new law, but the principal issue is that Spanish firms, except for banks and insurance companies, will have to switch their pensions money from the book reserve to a pension funding system by January 1, 2001.
“The form of investment for the fund could be through an insurance company, qualified pension plan or a collective unit-linked policy, but it must be transferred from the company accounts.
“We really hope the government takes a decision on this date because Spain really needs these reforms as soon as possible.”
Portugese pension fund law is also set to be tightened this month, with schemes required to have a qualified actuary performing liability calculations before submission to the ISP pensions and insurance regulator.
And according to Gabriel Bernardino, responsible for supervisory changes at the ISP, the new law before the Portugese parliament also has a provision for all schemes to carry out asset liability studies in the future.
“The asset liability matching part is not stipulated as an immediate requirement, but it is in the law, albeit with a certain amount of freedom to arrive at a satisfactory legal level in the future.”
Explicit approval for gestoras to select investment managers approved in OECD countries to manage Portugese pension assets is included in the proposed legislation.
Individuals taking out private pensions will also now have a 15 day withdrawal period allowing them to consider all the risk conditions of any policy taken out with a gestora before full commitment. Furthermore, occupational plans will be bound by law to inform their employees of all regulations and financial decisions affecting their retirement funds. Hugh Wheelan