December 4, 2020

Congress gives the green light to tie pensions to the CPI and penalize early retirement




Starting signal for the next reform of the pension system. Four years and two legislatures after starting its work, the Toledo Pact has today seen the recommendations that will support the legal changes necessary to guarantee the sustainability of the system revalidated by the Plenary of Congress. The support of the Chamber has been unanimous: all the groups have joined it, with the exception of Vox who voted against and ERC and Bildu who have abstained. Beyond the fine print of the text, the relevance of the agreement is unanimous and the consensus reached on a key reform that Brussels is closely following.

The Plenary has rejected the 19 individual votes that had been presented by the political formations, mostly by ERC and Bildu. Thus, the text is approved without modifications with respect to the document that the commission issued. Implement a plan to clean up the accounts -which includes the State providing more funds to pay for pensions and separating the sources of financing by eliminating expenses that are not directly related to retirement-, recover the CPI as a reference for annual revaluations, maintain the proposed extension in 2011 of the number of years of contributions necessary to calculate the pension (up to 25 in 2022), and assess the possibility of choose the best years of the degree are some of the proposals of the document.

The lack of ambition of the measures has focused criticism from the economic world. Faced with indexation with the CPI, a measure strongly criticized by international organizations for its consequences on the sustainability of the system, the Toledo Pact does urge the Executive to encourage the approximation of the real retirement age and legal and sets a period of three months for the reduction coefficients of early retirement to be compensated. It is proposed to analyze the early retirement that is currently taking place and the Government is given a maximum period of three months to propose solutions in those cases of early retirement in which there is inequity. Likewise, it is called to encourage company pension plans against individual ones and to guarantee widowhood benefits to couples without marital ties.

Regarding the autonomous, it is proposed that the new real income contribution system be defined in the social dialogue, which the Government is already working on. The ball is now in the government’s court. The document with the recommendations must now materialize in legal changes that will be prepared by the Ministry of Social Security and that must be agreed with the agents at the social dialogue table. Precisely the president of the CEOE, Antonio Garamandi, said today that the document of the Pact is “a declaration of intentions” and that now comes the social dialogue, which will be where employers and unions talk “about how to do it.”

What has been rejected: labor reform, incentives …

The document ratified today has not been modified as all the individual votes presented have been rejected. In total, the PP, Esquerra Republicana, Ciudadanos, EH Bildu, Más País-Equo, Compromís and the BNG had registered a private vote, requesting clarifications, in some cases, and radical changes, in others, which will ultimately not be taken into account.

The PP proposed recovering the tax deductions enjoyed by private pension plans until the collective “super fund” proposed by Escrivá is operational. In addition, the popular ones demanded to suppress the criticism collected in the text to the management of private pension plans and that it demands more transparency.

Ciudadanos asked in their two votes to include more incentives for active retirement and to end the penalty on the pension. Avoiding the mention of the “Austrian backpack”, the orange training did ask for a model of contributions to be reconciled that would accumulate during working life and that could be redeemed in case of unemployment or as a complement to retirement.

The more disruptive approaches have come from the hand of ERC and Bildu who have again demanded the repeal of the reform labor and pension systems, eliminate the complementary systems, that the reference to calculate the minimum pensions is 90% of the minimum wage, that retirement beyond 65 years of age is always voluntary and the “stop” of the maximum base of quotation. In addition, they have demanded that the regulatory base of the pension be calculated with the best 20 years listed, a point that the document only limits itself to proposing that it be studied, and the cancellation by the State of the debt contracted by Social Security in contrast to the improper expenses assumed by it in recent years.

For their part, Más País and Compromís wanted a clearer wording regarding the elimination of penalties for early retirees who accumulate contribution careers of more than 40 years and who went through setting a new pension based on their tax base and the number of years of contributions. Also the BNG had asked return to 65 as legal age of retirement, that the minimum pension was 60% of the average salary, calculation of the pension based on the best ten years of contributions and the “maximum base limit”.

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