Opportunities in Fund Raising: Spain’s Pension System

Knowledge for getting the most from the advinda Premium goSouthernEurope Pension & Insurance Package.

Population: 46.5 million

Pension system design

The Spanish pension system consists of three pillars:

  1. dominating mandatory state pension system
  2. rare voluntary occupational schemes
  3. voluntary private pensions

General retirement age is 65, gradually raised to 67 since 2013 until 2027.

Public Pension

  • dominating mandatory pay-as-you-go pension system, financed by contributions basing on salaries
  • mandatory for all employees
  • minimum contribution period of 15 years
  • minimum pension (“pensión mínima”) without paid contributions, depending on indigence; 2017: 593,50 Euro
  • fixation of maximum pension; 2017: 2,573.70 Euro
  • percentage of pension payments depends on number of contribution years; for 100% payment 37 years of contribution years are necessary, 50% payment are granted with 15 contribution years
  • pension payments are price subscripted
  • three levels of solidarity within Spanish public pension system:
    • between generations (active employees pay for the elderly beyond 65/67)
    • between regions (lower and higher pension payments)
    • between people with higher and lower income à existence of minimum and maximum pensions

Occupational Pensions

  • voluntary occupational pensions hardly play a role in the Spanish pension system
  • there are very few voluntary agreements between companies and their employees

Private pensions

Total investment of providers of funded and private pension arrangements equivalent to: 14.0% of GDP (2016)

Private pension assets 2016: $ 164,240.5 million USD (all forms of private investment with a value associated to a pension plan over which ownership rights are enforced by institutional units, individually or collectively. This indicator is measured in millions of USD; source: OECD)

Pension funds’ assets 2015: $ 112,021.4 million USD (assets bought with the contributions to a pension plan for the exclusive purpose of financing pension plan benefits. The pension fund is a pool of assets forming an independent legal entity. This indicator is measured in millions of USD; source: OECD)

Net pension replacement rate 2014: 89.5% (individual net pension entitlement divided by net pre-retirement earnings; measures how effectively a pension system provides a retirement income to replace earnings. This indicator is measured in percentage of pre-retirement earnings by gender; source: OECD)

2018-03-08T08:37:19+00:00November 28th, 2017|