Regulator prepares proposal for automatic accession to pension funds

A Insurance Supervisory Authority and Pension Funds (ASF) expects to present in the first quarter of next year a “concrete proposal” to frame in the Portuguese system automatic registration in private pension funds.

“ We are working on it, we have, of course, talked to the Government on this matter. What I would like, and I hope to be able to do, is that during the coming year, perhaps by the end of the first quarter, we can have a concrete proposal on how to fit into the Portuguese system, in a gradual logic, a ‘self-enrollment’ system so that we can bring supplementary pension systems to another level that we need a lot,” said ASF President Gabriel Bernardino.

In the margins of the launch of the Reform Saving Observatory, Gabriel Bernardino defended the need to complement the public pension system.

Asked about the creation of a pension mechanism similar to the Deposit Guarantee Fund, the president of ASF pointed out that if a guarantee or maximum protection is granted in the capital, “this will obviously not benefit profitability in the future.”.

Looking at the work of several European Union (EU) countries, Gabriel Bernardino pointed out that “what is happening and what is the most innovative” are the default options, which automatically enroll workers in occupational pension systems.

“ The default option that is being assumed in many countries is the so-called life cycle,” he said, explaining that they are mechanisms that take more risks in the case of younger people and fewer risks in people closer to retirement.

Gabriel Bernardino identified three urgent measures to promote supplementary pension systems: the implementation of a pension monitoring system that allows us to understand the expected income, address the automatic registration systems and reformulate the savings-reform plans.

In the case of the first point, the governor’s president stressed the importance of a mechanism that allows easy access to and access to the estimated income in the reform, either by the public pension or by the part of pension funds or individual savings.

The ‘self-enrollment’, which ‘is not forcing people to save’, works as a way to ‘win inertia’ in savings through occupational pension mechanisms with the company or the worker.

As for the PRRs, Gabriel Bernardino insisted that they should be brought to the 21st century, either by risk or by transparency.

The head of the insurance regulator and pension funds also insisted on finding a solution that “through tax benefits or other types of public policies ultimately translates an increased benefit to people who save and have low incomes”.

Gabriel Bernardino stressed that these are the people who will need the reform supplements most, so it is something the regulator is working on and that he will “in due time” give his advice to the government.