SPAIN – Government proposals to introduce tax incentives to get people saving could shake up the asset management and pensions industry in Spain, says Ana del Solar at Towers Perrin in Madrid.
If approved by Parliament at the end of the year, the proposals could become law early in the New Year, del Solar suggests, saying this could lead to wider ranging reform of the industry: “This is just the beginning of a move designed to stimulate economic growth and get people saving more for their retirement and we expect a shake up of the pensions environment later next year.”
The current proposals call for the abolition of tax deduction limits on both private and occupational schemes, and are designed to encourage employees to take out private pensions to supplement their occupational schemes. “People will no longer be taxed on having both an occupational and private pension plan and hopefully this will be an incentive for them start topping up their existing schemes,” del Solar says.
“The proposals should benefit employees and employers alike. And the investment management industry is watching with a keen eye, since opening up the pensions market will have a tremendous impact on them too,” del Solar comments, adding that companies would have a double tax incentive, since the reform proposals allowed for a new 10% tax saving on employer contributions to occupational schemes.
However, del Solar criticises the clarity of the reforms. “Many in the industry, including ourselves, feel that the objectives of the tax incentive reforms are not clear, though they are a logical step towards wider pensions reform and have been largely welcomed.”