The challenge of making pensions sustainable

BarcelonaHow to make the pension system sustainable in an environment of longer life expectancy and retirement age for the generation of baby boom it is a challenge shared by all Western countries. And the protests we are seeing in France these days, where Emmanuel Macron aims to extend the minimum retirement age from 62 to 64, show that it is a key issue that arouses passions. In the Spanish case, it is clear that something had to be done, because in recent years the Social Security fund has been accumulating deficits and has been emptied due to a set of factors. That is why the European Commission had conditioned the arrival of the third package of European funds on the reform of the pension system. In the end, the two partners of the Spanish government have reached an agreement, endorsed by Brussels, in which they try to give an answer to the challenge without reducing the amount of pensions, which was the threat that has loomed throughout the negotiation

Finally, the pension calculation system will not be touched until 2040. During these years, the current one can be maintained, that is, by calculating them based on the last 25 years of contributions, or extend it to 29 by subtracting nor the two worst. The Social Security itself will be responsible for making the calculation and saying which system benefits the recipient the most. Of course, from 2040 there will be a four-year transition until only the second option remains, that of 29 years. Both the PSOE and UP claim that this system is neutral and does not reduce spending. So how will the system be balanced? Well, by way of income, that is to say, by increasing contributions for higher salaries. So far the highest salaries are only quoted up to 4,495 euros. What we are talking about, then, is to increase this ceiling in order to increase the base of the contribution and thus collect more.

Extensive monitoring will be required to ensure that balance is achieved, as the calculations have been made on the basis of an optimistic scenario of the economy”

In principle, the solution proposed by the Spanish government is consistent with the general policy of the executive: do not cut benefits and act through income. However, it will be necessary to monitor thoroughly to ensure that the balance is reached, since the calculations have been made on the basis of an optimistic scenario of the economy, in which the labor market will have more and more contributors and no major crises on the horizon. In any case, we must congratulate the tenacious work of Minister José Luis Escrivá, who has managed to weave an agreement between several parties that was frankly difficult. Surely, the fact that the interlocutor for Unides Podemos was the second vice-president, Yolanda Díaz, has made things easier. The agreement still needs the endorsement of the government’s usual partners in Congress, especially ERC and EH Bildu, but it is difficult for them to oppose it beyond wanting to introduce technical improvements. The agreement, as we said, is essential for Europe to continue sending Next Generation funds. The announcement also gives oxygen to an executive that hit rock bottom this week with the law reform division of the only yes is yes. Now it would be time to unblock other important laws, such as housing or gag.

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