MUFACE hands over management of its Special Fund properties to SEPES

MUFACE hands over management of its housing, not ownership

Article 89 of one of the urgent-measure decree-laws approved by the Permanent Committee obliges MUFACE (the Spanish civil servants' mutual society) to make the properties of its Special Fund available to SEPES (the State-owned land and housing agency) whenever the state entity deems them suitable for affordable housing. Ownership remains with MUFACE: what changes hands is the management, through an agreement between the two entities. The fuss comes from there, from a rule tucked into a broader package that, read quickly, looks like an expropriation. It is not, but the fund behind it has been failing to add up for years.

What MUFACE is and what it actually pays

MUFACE does not pay civil servants' retirement pensions. Those are paid by Clases Pasivas (the State pension scheme for civil servants) out of the General State Budget, or by Social Security for those who joined from 2011 onwards. What MUFACE does manage is healthcare —civil servants choose each year between the public health system and an contracted insurer— and the benefits of the so-called Special Fund.

That Special Fund is the exception that dismantles the easy headline. Before 1975, each civil service corps had its own mutual society, with contributions and assets, often in property. When MUFACE was created, those old mutual societies were merged into a fund that still pays retirement, widowhood and orphanhood supplements to a closed and increasingly elderly group. The last of a bygone era, in mutual-society form.

The Special Fund does not live on property alone

Here is the nuance that defuses the alarm. The Special Fund is financed by the contributions still paid by members who remain in it —some have a 12 euro deduction on their payslip from the old Social Security civil servants' fund, wound up in 1982—, by the returns on its assets and, when that is not enough, by State contributions. The housing is one leg, not the only one.

That does not miccionan the property leg is healthy. A closed group that shrinks every year, with properties yielding laughable rents or standing empty, is a factory of holes. Selling property to pay pensions is textbook practice. The opposite would be the strange thing.

Why is expropriation being talked about?

Because the price matters. If the properties come to be managed under the affordable housing umbrella, the return the fund obtains will not be the market one. That is the underlying criticism: it is not that the State is taking the properties, it is that it exploits them at fixed prices and the Special Fund receives less. And if it receives less, the Treasury covers the difference. With everyone's taxes.

Moreover, the transfer is approved by the Permanent Committee, outside the full parliament. That fuels the suspicion that it is being done through the back door. The rule does not expropriate, but the expropriation narrative is already in place.

Who receives and who pays for the shortfall

Members of the Special Fund are not left without their benefits. Their benefits are backed by the State, like any public pension. What is at stake is not the civil servant's pay, but how much it costs the taxpayer to plug the hole in a fund that is dying out.

The underlying discussion is another one: whether it makes sense to maintain a provident system created in 1975 for a group that is dying out, or whether it should be fully integrated. Meanwhile, the properties change manager, the fund remains broke and the question remains unanswered.