The Popular Party has presented an amendment in the Senate that reverses its previous stance and excludes retired mutualists from the transition to Social Security. The measure, which affects around 20,000 people, aims to contain the estimated cost of €5.2 billion.
The PP has made a 180-degree turn in the Senate and is now aligning with the Government's initial proposal for the transition to the RETA for alternative mutualists. The new amendment presented by the Popular Party expressly excludes passive mutualists —those who are already retired and receive their pension from the mutual fund— a group of about 20,000 people.
The change represents a setback for retirees who hoped to transfer their rights to Social Security and thereby improve their future pension. The original proposal from the PP, approved in Congress last June, included this group, but now the Popular Party has rectified to avoid an economic impact that the Government estimates at around €5.2 billion.
The requirements of the new amendment
The amendment presented in the Senate states that "the applicant cannot be a pensioner under any public regime or the respective alternative mutuality, except in the case of a widow's pension." This excludes passive mutualists, who are those already receiving their retirement income from the mutual fund instead of Social Security.
For active mutualists, the transition remains open, but with more restrictive conditions. The PP has also modified the so-called "one for one," which allowed each year contributed to the mutual fund to count as a full year in Social Security. Now, that coefficient will only apply to calculate the regulatory base of the pension, not to automatically equate the contribution bases.
The PP now proposes a conversion coefficient between 0.67 and 0.87, compared to the 0.77 initially proposed by the Government.
This means that mutualists wishing to transfer their contributions will see the value of their contributed years reduced, depending on the income level they had at the time. The measure aims to adjust the cost of the system and prevent the transition from creating a hole in Social Security accounts.
Cost to the system and reactions
The Ministry of Social Security had warned that the PP's initial version, which included passive mutualists and the full one for one, would incur a cost close to €5.2 billion. A bill that the Government considered unsustainable for the public pension system.
With the new amendment, the PP seeks a balance between providing coverage to alternative mutualists —about 100,000 active— and containing expenses. However, the exclusion of retirees has generated discontent among mutualist associations, which believe that those who have already completed their working life are being left behind.
"It is a double penalty: first they contributed to a mutual fund that now gives them lower pensions, and when a way to improve opens up, they are shut out," sources from an affected association state. The processing in the Senate will continue in the coming days, with the possibility of new amendments before the final vote.
What it means for active mutualists
For mutualists who are still working, the transition remains an option, but with tougher conditions. The conversion coefficient between 0.67 and 0.87 means that for each year contributed to the mutual fund, between 0.67 and 0.87 years will be recognised in Social Security, depending on the contribution bases.
This will directly affect the calculation of the future pension: the more years contributed to the mutual fund with low bases, the less recognition there will be. Mutualists wishing to take advantage of the transition must apply before the deadline set by the law, yet to be determined.
The measure also impacts self-employed individuals who contributed to alternative mutual funds before 1996, the year they were integrated into the RETA. Many of them have gaps in contributions or under-contributed years, and the transition was the only way to improve their public pension.
With the new amendment, the PP attempts to defuse criticism that its initial proposal was a "blank cheque" for mutualists, but risks losing the support of a group that has traditionally been close to its views. The vote in the Senate is expected in the coming weeks, and the text will return to Congress if there are changes, where the Government hopes to push through its version.
You may also like
