The soap opera of mutual societies is beginning to end. Lawyers, solicitors, architects and other professionals a gateway to convert the money saved through their professional mutual societies into years of contributions to Social Security. Your goal? Access decent pensions. Now, these mutual societies are paying pensions, in some cases, monthly. This week, the Justice Commission of the Congress of Deputies approved the presentation of the bill to create this gateway, which had been paralyzed for almost a year.
The political groups have agreed that self-employed workers who contribute to the professional association can transfer the capital to Social Security and access the minimum retirement pension. The reform, promoted by the director Elma Saiz, faces its final phase of parliamentary processing after passing this first filter in Congress. The text will be debated in committee before its final approval in the coming weeks.
Who will be able to access?
The measure is aimed at professionals who contribute through alternative mutual societies instead of through Social Security. The proposal approved in committee expands access to the gateway to all alternative mutual members. The ministry’s original proposal only allowed access to those who joined the system.
Will it be mandatory to change?
No. The self-employed will be able to decide if they want to continue contributing through their professional mutual insurance company or if they prefer that it convert their savings into Social Security contributions. Firms such as the Mutuality of Lawyers or the Mutuality of Attorneys are now calibrating how many of their clients will choose to leave.
How are savings converted into years of contributions?
This is one of the points of greatest disagreement between the parties involved. The groups of lawyers and attorneys demanded that each year contributed to the mutual insurance company be converted into a year of contributions, for the calculations of the retirement pension.
The problem was that, on many occasions, the contribution levels to the mutual societies had been much lower than the minimum contributions to the Special Regime for Self-Employed Social Security, known as RETA.
Finally, the regime agreed upon in committee establishes a conversion coefficient of 0.77, which will determine how these savings are transformed into periods of contribution and into the future pension. Thus, 10 years of contributions to the professional mutual insurance company will become about seven and a half years of contributions to Social Security.
There will be a special regime for those over 55 years of age, who no longer have much room to contribute towards their pension. Here, each year of contributions to the mutual insurance company will be recognized as one year in Social Security. This way they will be able to access the RETA minimum pension.
What other conditions are there?
To access this gateway, mutual members must meet two main conditions. The first is to no longer be Social Security pensioners, except in cases of widowhood. Secondly, not having the minimum contribution period necessary for a public pension
How will the capital be transferred?
The text also provides for a progressive transfer of capital from mutual societies to the public system, although the specific details will be defined later through regulatory development.
From the Mutual Association of Lawyers they demand that the transfer of funds from the mutual members does not occur until the time of retirement of each of them arrives, “to avoid the early liquidation of long-term investments that have been made with the contributions of the mutual members, which could have a negative impact on their profitability.”
However, these entities have been preparing for this moment for years and believe that .
What happens to those who recently joined RETA?
The text approved in committee provides for a special agreement to enable the recognition of up to five years of contributions for those former mutual members who decided to leave the alternative system and lost contributions.
What is the origin of the conflict?
Professional mutual societies emerged in the first years of the Franco dictatorship. In 1944 it was created to help this union with old-age pensions; In 1948, the largest of all arose, with mandatory registration for all lawyers, and which would help them after retirement and provide pensions for orphans and widows. There were also mutual societies for notaries, priests, bank employees…
Until 1995, lawyers and other professional groups had the obligation to contribute through their corresponding mutual insurance company, and it was the entity that established how much they had to contribute.
In the case of social security mutual societies, the seams began to burst due to the aging of the population. Originally, these insurers worked with a pay-as-you-go system: so much money came in each year, so much was distributed. As happens with Social Security. But as life expectancy has increased, the model has become more and more unsustainable.
