Workplace pension funds have been the most profitable savings vehicle over the past decade according to the study entitled: ‘Ten years of group savings in Spain'. The fourth edition of this study is published by Mercer and Esade and concludes that workplace pension funds offer the best ratio between profitability and risk. The report also says that profitability for group savings in Spain was 2.8% during this period.

The report shows that with a yield of 2.7% and a risk level of 5.4%, workplace pension funds achieve the best relationship between these variables and have been the best savings vehicle over the past decade. These funds benefit from the professional advice provided by the control commissions that manage them, a diversified range of investments, and low commissions.

There is also a relationship between size and return, with large funds achieving up to 0.5% more returns than smaller funds. The report says that of the 65 funds holding more than €500m (representing 53% of group savings assets) 78% of pension funds outperform the average return for their respective risk quartiles.
 
Legislative initiatives currently support workplace pension funds with the aim of making these funds as popular as possible. However, given the relationship between the size of a fund and its results, new legislation should focus on giving individual savers access to truly institutional management with a high degree of governance.

Xavier Bellavista, director of Mercer's investment area, argues that over the past decade 34% of mixed funds (representing 51% of total assets) have not beaten inflation. Funds in this situation include low-risk fixed-income plans and pension funds. This scenario is not only because of the sharp upturn in inflation in 2022 as the data was similar in December 2021.

According to Jordi Fabregat, co-author of the report and a lecturer in the Department of Economics, Finance and Accounting at Esade: "we should encourage retirement saving from the age of 35 at the latest, even though we are aware of the difficulty for some workers of giving up a part, however small, of their net salary. This is because the average savings by Spaniards in pension plans is too low to compensate for the loss of purchasing power caused by the difference between final salaries and the first retirement pension payments – which will tend to decrease as a percentage in the future.”  

The study points out that there was a historic increase in household savings during the pandemic – although the figure has since fallen back to 2020 levels. The savings differential between Spanish households and the Euro zone average has increased to its highest levels. Spanish household savings continue to be concentrated in property, while financial assets (investment and pension funds) are stagnating – especially pensions.