WHAT IS THE COMMITMENT TO PENSIONS?

WHAT IS THE COMMITMENT TO PENSIONS?

Pension commitment is a concept coined by law 8/1987 plans and pension funds. This law was repealed, and replaced by Royal Legislative Decree 1/2002, by which the recasted text of the law of regulation of plans and pension funds was approved. This law defined what was meant by commitments for pensions.

Pension commitments are those commitments arising from contractual or legal obligations of the employer with the personnel of the company and linked to the contingencies set forth in article 8.6., such as retirement, disability or death. It is not necessary that pension commitments include coverage of the three specified contingencies, but that it is enough with any of them. In any case, these pensions may take any of the forms set out in article 8.5, i.e. provision in the form of capital, income or mixed. 

In addition, you will understand every provision which is intended for coverage of such commitments, whatever that is its name.

OBLIGATION OF OUTSOURCING OF PENSION COMMITMENTS

Employers are obliged to outsource these commitments by pension through the hiring of a pension or insurance plan since the promulgation of the regulation on the implementation of the commitments by pension companies with workers and beneficiaries, RD 1588/99. This regulation ordered the companies to maintain commitments for pensions with their workers to outsource them before January 1 of the year 2001, including benefits caused.

These commitments by pension can get through sectoral collective agreement, collective agreement of company or individual agreement with the employee.

Until the promulgation of this regulation was very common Spanish companies to maintain internal accounting reserves to meet these commitments. But done this way, were difficult realization, mainly those related to retirement. This generated serious doubts in order to secure commitments for pensions if the company is declared insolvent.

Two products can be used to outsource the commitments for pensions: pension in the form of employment or collective life insurance plans.

All companies resident or established in national territory, including public enterprises and entities of public law, which have assumed any obligation pension with its employees, are forced to outsource the commitments for pensions, including both workers active, inside and outside of Spain, such as retirees or beneficiaries of such benefits.

In addition, it affects not only legal persons, but also the physical count with employees who have made these commitments with them.