Spain: Royal Decree 668/2023 amends the regulations on pension plans and funds

Spain - 

The royal decree contains, among other new legislation, implementation of the rules on simplified occupational pension plans, the rules on the non-discrimination principle and the provisions on merging plans where corporate transactions result in the same company becoming sponsor of more than one occupational pension plan or sponsor of an occupational pension plan and at the same time policyholder for one or more employee welfare and pension benefit plans.

Royal Decree 668/2023 of July 18, 2023, amending the regulations on pension plans and funds, approved by Royal Decree 304/2004 of February 20, 2004, comes into force on July 21, 2023, except for the provisions on the obligation of monitoring committees for occupational pension plans to meet at least twice a year, which will come into force in 2024.

This decree sets out the following provisions regarding companies’ supplementary employee benefits:

  • It implements the non-discrimination principle with regard to occupational pension plans, and stipulates that non-discrimination will be interpreted as relating to a worker’s right to eligibility for the plan, which will imply receipt of the required contributions by the employer from inclusion in the plan for as long as an employment relationship exists with the sponsor.
  • The one month’s length of service required for workers to be eligible for occupational pension plans has to be determined by reference to the length of time that has run since the worker joined the sponsor’s workforce under any type of employment contract.
  • If corporate transactions result in a same entity becoming sponsor of more than one occupational pension plan or sponsor of an occupational pension plan and at the same time being policyholder for one or more occupational employee welfare and pension benefit plans, all the participants or insured employees and their vested rights will have to be included in a single pension plan, along with any beneficiaries and their financial rights, which will have to be done within twelve months from the effective date of the corporate transaction. The sponsor and the workers’ representatives may apply jointly to the insurance and pension funds authority for an extension of that time period.
    This twelve-month adaptation period will also be allowed in cases of subrogation to employment relationships to adapt their terms to the separate rules for the contributions and benefits of the employees concerned.
  • As a general rule, the same person cannot be both participant and beneficiary for the same contingency. Also, simultaneously making contributions and receiving benefits in respect of the same contingency are incompatible with each other, although the decree allows an exception to this rule in cases of partial retirement, flexible retirement and active retirement if the employer keeps up its contributions to the pension plan and on the terms set out in its regulations.
  • The rules on simplified occupational pension plans are implemented, and in particular:
    • It states that independent contractors in the industry may be included in this type of pension plan undertaken in collective bargaining, by adding the required annex.
    • The procedure is stipulated for merging simplified occupational pension plans into a government-sponsored open occupational pension fund, as well as into private occupational pension funds.
    • The procedural requirements are determined along with the content of the terms of simplified occupational pension plans, and the rules on information to be provided to the participants and beneficiaries of this type of occupational pension plans.
    • The procedures and members of monitoring committees for simplified pension plans.
  • To implement them the procedure is set out for converting occupational pension plans or any existing employee welfare and pension benefit instrument at companies into a simplified occupational pension plan.
  • A maximum twelve-month period from the entry into force of the royal decree is laid down for adaptation to the required documents and to the new obligations regarding the information to be provided to participants and beneficiaries of occupational pension plans, as well as to the other new provisions in the royal decree.