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The merger may harm pension plan participants

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Once approved the CaixaBank and Bankia mergerInvestors who have contracted pension plans in these financial institutions wonder how this new situation can affect them. First, the total assets of these plans throughout Spain as of June 30, 2020 was almost 112,000 million eurosAs a result of this bank reorganization, the first pension fund manager in Spain and probably in Europe emerged, with a joint equity of more than 37,000 million euros.

What can happen? Two aspects should be assessed. A negative one, and that is that by reducing competition, the temptation of the new manager to offer participants their own products that give them great benefits, further increasing commissions and forgetting about profitability, is always on the table.

The positive is that the arrival in our country of pan-European pension plans, whose delay cannot be extended beyond 2021 according to Brussels regulations, will offer more and better investment solutions for retirement, profitable and cheap if we compare them with the current ones.

On the other hand, I would be lying if I said it reassures me that the State owns 16% of Caixabank after the merger. Knowing the intentions of the current Government to modify the taxation of pension plans, I do not doubt that it will press what it can so that it is the bank itself that promotes collective pension plans, as Minister Escrivá was in charge of announcing last week , to the detriment of the private ones.

The truth and truth is that this is not going to be the last merger. Soon there will be only three large banks and four small ones left, and that bank concentration will not be good for the investor. Taking into account that this pension industry has always been disproportionately in the hands of financial institutions, opting for disintermediation can be a solution to this coming problem. products like neofunds of pensions, with minimal commissions and focused on the personalization of the investment and the profitability of the participant, they have to be a remedy. Feelcapital 50 was the first, I hope many more will come soon.

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