Escrivá rules out raising the retirement age above 67 years to rebalance the pension system

Gonzalo D. VelardeFOLLOW, CONTINUEMadrid Updated: 05/11/2022 15:11h

The retirement age will not rise above 67 years in Spain. Given the different solutions that the Executive is studying for the pension reform and that is being negotiated with the social agents, the possibility of increasing the legal retirement age again is not valued, which would be a lever to cut monthly spending on benefits . The
payroll already amounts to 10,000 million
of euros per month.

In a speech at the Opening Day of the V Meeting of Senior Economy, the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, assured that this way of cutting pension spending is not valued as there is a consensus to establish the legal age of retirement in 67 years from 2027, at which time the transitional period of the reform approved by the PSOE in 2011 will end.

Escrivá assures at this point that in Spain «it is not an issue that generates confrontation; on the contrary, it is solved by consensus”, and recalls that with the agreement of the social agents and the Toledo Pact, when a gradual increase was approved, which will end in 2027, 67 years will be required for ordinary retirement. For this year 2022 the legal retirement age is 66 years and 2 months.

According to calculations by the Social Security technicians to whom ABC has had access, each year of gain in working life over the actual retirement age -in 64 years and 6 months according to figures from the Bank of Spain- represents a reduction in spending 4,500 million euros per year. However, this extreme is discarded and
The Government will try to rebalance the Social Security accounts
with other parametric measures such as the unstopping of the maximum contribution bases, the extension of the period of years contributed for the calculation of the pension -currently the last 25 years are taken- and the separation of the sources of financing that take out the so-called « improper expenses» of the Social Security budget.

Financial pressure from the 'baby boom'

At this point and given the financial horizon of Social Security, compromised by the retirements of the 'baby boom' generation, the minister wanted to reassure about the soundness of the pension system: "The tensions faced by the Social Security system, Looking ahead, they are protracted but transitory, occurring over the next two decades. The generation of the 'baby boom' is quite broad, and the one that succeeds it - narrower - is the one that has to finance the system. Then it is followed by another generation that is approximately the same size, which will rebalance the system from 2050," Escrivá explained this Wednesday.

Among the solutions that are already being adopted, the Government points to the recently approved Intergenerational Equity Mechanism (MEI), "which is going to reactivate the Reserve Fund, the pension piggy bank, until the year 2032", and the unstoppable (increase of the upper limit) of the maximum pension, which will be accompanied by a parallel evolution of the corresponding contributions, reinforcing the system with more income in the coming years.

Escrivá underlines that the sustainability of pensions is assured, mentioning the "very rapid" reduction in the Social Security deficit -which this year will end at around 0.5% of GDP, while last year it was 0.9% -. The objective of the Government is to reach the end of the legislature around the budget balance. He has also reassured about spending on pensions, comparing the 12% of GDP that it represents in Spain with the 16% that it represents in France or Italy.

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