First year of private pensions brings 3.7m employees into the system

The first year since the launch of mandatory private pensions (2nd pillar), on September 17, 2007, saw almost 3.7 million euros in employee contributions, out of the total of around 4.3 million employees who had joined a fund. The introduction of private pensions has revolutionised the pensions system because now, each employee has their individual account, and their money is invested, as opposed to the previous system, which directed the money collected from employees straight to pensioners. On May 20, the National Pensions Office (CNP) transferred the first round of contributions from around 3.2 million employees to mandatory pension funds. All employees under 35 had to join such a fund, but the possibility was also open to those aged between 35 and 45. The contribution to the mandatory pension funds amounts to 2% of the gross income, and is set to rise by 0.5% a year, starting with next January, until it reaches 6% in eight years’ time.