Key points

What is the purpose of Act 12/2022?

The Act amends the pension plan regulations in order to promote and strengthen occupational pension plans. The aim is to increase the number of employees participating in these ancillary social welfare systems, while encouraging savings in small and medium-sized companies.

What measures have been established?

The main measures established to meet this aim are:

• The possibility for sectoral collective bargaining agreements to instrument pension commitments for employees, with special attention to promoting their implementation in small and medium-sized enterprises.
• The possibility for sectoral collective agreements to require companies included in their scope to adhere to the pension plan established in the sectoral collective agreement itself.
• Employees must be automatically assigned to the Pension Plan created by a collective agreement or the collective bargaining agreement.
• Incentives to promote occupational pension plans: tax deductions for companies and employees and reductions in company contributions to the Social Security.

What are the main new features?

• Simplified employment pension plans are created: these are employment plans promoted by companies included in sectoral collective agreements that implement employment plans in favor of their employees.
• Companies adhering to a statutory collective bargaining agreement of a sectoral nature, which provides for the instrumentation of pension commitments with their employees through a simplified sectoral employment pension plan, must join the plan if so established in the relevant agreement. In any case, the company may improve the amounts stipulated for company contributions in such agreements.
• Notwithstanding the above, the sectoral collective bargaining agreement may provide for the possibility that companies in the sector don't adhere to the simplified sectoral plan, but only if they agree to promote their own occupational pension plan, which in no case can have conditions that are worse than those set out in the sectoral plan.
• When the agreement or collective bargaining agreement has established that employees must be included in the pension plan, they will be understood to have joined the plan automatically (unless the agreement or collective bargaining agreement provides that employees may expressly declare in writing that they do not wish to join into the plan and send their statement to the committee that monitors the plan within the period established for doing so).

The economic measures for the promotion and incentive of employment pension plans include the following:

• 10% deduction in company contributions paid for employees with gross annual salaries of less than €27,000. In the case of employees with gross annual salaries that are equal to or greater than €27,000, the deduction will be applied to the proportional part of the company contributions that corresponds to the amount of the gross annual remuneration indicated.
• Reduction of the employer's social security contribution for common contingencies, but only for the increase in the contribution that comes directly from the employer's contribution to the pension plan. The maximum amount of these contributions (to which a 100% reduction will be applied) is the product of multiplying by 13 the contribution obtained by applying the general contribution rate payable by the company to cover such contributions (which, in 2022, is 23.60%) to the minimum daily contribution base of Group 8 of the General Social Security Scheme for common contingencies, (which is €38.89 in 2022).
• Employees may deduct from their personal income tax base for contributions to pension funds and/or social welfare systems up to a maximum joint limit which will be the lesser of the following amounts: (a) 30% of the sum of the net income from work and economic activities received individually in the year or (b) the amount of €1,500 per year. This amount may be increased by €8,500 per year, provided that certain expressly regulated conditions are met.

When do the changes introduced by Act 12/2022 go into effect?

The changes came into force on July 2, 2022. However, the reductions in company Social Security payments linked to employer contributions to occupational pension plans will not be applicable until January 1, 2023.

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