A background with history: its use over time
For decades, the retirement reserve fund, formerly known as CASS old age, has been a key financial instrument for the Government of Andorra. This fund has been destined, at different times, to cover the construction of essential infrastructures in the country, including hospitals and residences.
Economic transactions and their impact
In exchange for public investment in infrastructure, the Government paid an annual rent that was 5% of the value of the funds used. After two decades, the fund had recovered the capital provided, but without gaining any interest, which has aroused discussions about the viability of these financial operations.
The FHASA case: a controversial decision
A remarkable example is the purchase of Fhasa’s assets in 1988. In this case, the fund granted a loan to the General Administration with a 5%interest, while market rates exceeded 17%. This discrepancy raises issues on the financial management of the fund.
Community decisions and their reflection in the background
In the 1970’s, local discussions culminated in a Magna assembly that rejected the proposal to buy FHASA assets for 450 million pesetas. Interestingly, shortly after, these same assets were acquired for a much higher price, 3.5 billion pesetas, highlighting the discrepancies in the assessment of these assets.
Society expectations: A future mortgage?
The debate on the conditions of loan of the Retirement Reserve Fund is relevant today. The idea that the fund may offer funding to the citizenry for the acquisition of housing, as proposed in the past, is still an aspiration that raises interest. Not so long ago, CASS suggested the General Council the creation of a mortgage box, a proposal that did not prosper, but reflects the current needs of society.
Final reflections on fund management
Over the years, it is clear that the decisions made by the fund have had significant consequences. The need to review the financing and investment strategies of the retirement reserve fund is more relevant than ever, in a context where the population seeks solutions to access housing.
