(Bloomberg) -- The Spanish government will introduce new rules to encourage young people to invest in private pension plans in a bid to shore up retirement savings.
The new regulations will reduce management fees and give savers the option of withdrawing funds after 10 years, an Economy Ministry official said. The plan will be applied retroactively starting from 2015, so savers could retrieve their pension pot come 2025, the official said.
The government believes the option to give savers access to their funds sooner will prove attractive for younger workers who may worry about not having access their money for decades under existing rules, the official said. The administration aims to get the plan approved by the cabinet within the next six months.
Spain is taking steps to promote private retirement saving as an aging populating and stalling birth rate puts pressure on the public pensions system.
Savings accumulated in individual pension plans in Spain add up to 6.3 percent of gross domestic product, according to industry body Inverco. While the amount has risen slightly over the past two years coinciding with an improving jobs market, it's well short of the average 37 percent average for Organization for Economic Co-operation and Development members.
To contact the reporter on this story: Maria Tadeo in Madrid at mtadeo@bloomberg.net.
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Charles Penty
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