The legislative reform to ensure alternative mutualists a gateway to the RETA (Special Regime for Self-Employed Workers) faces its decisive days in Congress, with the vote on its amendments in Committee. And, if it overcomes this hurdle, its final vote in the Plenary, foreseeably next week.
The proposal is being examined after arriving from the committee without any votes against, but with its support still to be defined. All parties opted to abstain so as not to block the reform, after the incorporation of several amendments on the initiative of the PSOE.
Although no party has confirmed its support, several sources from the Committee take for granted to Demócrata that the bill will overcome its vote and reach the Plenary. Another matter is how, as it will also have to vote on all the amendments that remain ‘alive’.
In any case, they do see it as possible that a ‘minimum’ gateway will emerge that guarantees a decent pension for a large part of the mutualists.
Issues such as the timing of the transfer of funds from mutual societies to Social Security, the tax treatment that will be applied when this is carried out, and whether the gateway will be open to groups that are currently excluded remain up in the air.
This is the case, as it is currently drafted, of mutualists who are already retired and also those who have 15 years of contributions to Social Security and who, therefore, have the right to receive a public pension.
Ongoing negotiations
In recent days, the groups have exchanged proposals to continue amending the initiative. In the case of Sumar, according to sources from this coalition, negotiations are underway to extend access to the more advantageous gateway to more people, intended for older mutualists.
The committee agreed on an equivalence between each full month of registration and contribution in the mutual society and its equivalent in the RETA for mutualists over 55 years of age in 2022, for the purpose of calculating the pension amount. This threshold, according to these sources, could be modified to accommodate a greater number of mutualists.
Other negotiations concern the way in which mutualists would convert their funds into contributions to Social Security for their conversion into a retirement pension.
Specifically, regarding the reference to the update of the CPI to be applied to contributions, which Sumar intends to be the update applied by the Government in office to the contribution bases.
What proposals did the committee approve?
No time limits. The gateway would be open to mutual members who joined the mutual society after 2013, and it is no longer required to have been registered until 2022.
Coefficient. The coefficient to be applied when converting the capital accumulated by mutual members into the equivalent of Social Security contributions is set at 0.77. This coefficient is applied to the minimum contribution base to deduct those contingencies that the mutual member has not benefited from by being in another system. The initiative set it between 0.67 and 0.87.
1 to 1 but little. For mutual members over 55 years of age in 2022, the demanded 1-to-1 rule would be applied, as the text currently stands, but only for the purpose of calculating the coefficient applied to the regulatory base of their pension (and thus calculating its amount). Each full month of registration and contribution in the mutual society will be counted as a full month of registration in the RETA, in order to facilitate the recognition of a pension.
Recognition of contribution years. The recognition of contribution years is allowed for former mutual members who lost their contributions upon leaving the system before its transformation into a capitalization system and do not reach 15 years of contribution in Social Security. The agreements they sign may recognize up to five additional years of contribution.
Equivalence of contributions (or benefits). The initiative raised the amount of benefits to be paid by mutual societies or contributions to be paid by mutual members from 60% to 80% in order to try to equate both systems. Now the committee sets this percentage at 100%.
In other words, mutual societies must pay in their pensions the equivalent of the minimum Social Security pension (or equivalent by contribution bracket if higher) or, where appropriate, demand a contribution equivalent to what would correspond to them in the contribution system based on real income of the RETA.
End of alternatividad in 2028. The end of alternatividad is postponed by one year, with the Government's commitment to present a study before this date that analyzes this regime, taking into account the number of people covered by the gateway, the impact of the contribution system based on real income, and the equivalence of benefits.