FINANCIAL INSTRUMENTS FOR RETIREMENT

            Lately in Valencia – more precisely in the Foundation Bancaja- a very complete work about the “financial instruments for retirement” was presented by M. José Luis Olivas Martinez, President of Bancaja.

            Javier Adserá, President of the Foundation for Financial Studies (FEF), draws on a detailed report analyzing the situation of the current pension scheme, which allows him to recommend the creation of a compulsory complementary system, whether public or private.

            This report mentions the position in which the demographic situation will put the social security. “Nowadays, the most important population segment in size corresponds to people aged between 30 and 34; in 2050, the largest age group will be 70 to 74”, according to Adserá. The demographic pyramid complicates the matter of pensions. He thinks that immigration relieved this situation, but it is a false improvement since a high number of immigrants stay in the country, get old, and have a similar birth rate than native people.

            The report, under the direction of César Molinas, proposes to improve the financial education of Spanish people as well as their knowledge of how the social care system works.

            Adserá insisted on the need of making the debate on the future of pensions public. He considers that we must find a solution to this problem by consensus at the beginning of a legislature, to avoid electoralism.

The director of FEF asserts that if we want to maintain social equity, it is necessary to increase savings and increase the age of retirement.

As for savings, the report underlines the national specificity in the idea of savings on property inheritance. That is why it proposes a reverse regulation of mortgage, together with a complement such as an insurance of deferred income. The FEF also asks for more fiscal generosity with some of the financial instruments for saving.

            Insurance and saving companies are required to stake on this kind of “instruments which allow the transfer of longevity risks to the financial sector”.

The report even includes a series of general recommendations to the Treasury, to the National Institute of Statistics and to the insurance industry.

            The conclusions drawn by Crispin Southgate and Chris Lewin on risk management of longevity in the United Kingdom are very interesting.

            An example of reform of the public pension scheme is also attached to the report: “The case of Sweden”, by Juan Pérez-Campanero. Due to its length, we will only mention it.

            In accordance with this will to increase the population’s financial education, FEF and Bancaja have signed a collaboration agreement to promote investigation, training and information about the financial and transactional markets. Moreover, Olivas underlined the fact that Bancaja proposes products especially adapted to the elderly.

Luis Antº. Tena Orduña

President of the Association of Retired Staff and

Pensioners from Bancaja