The Minister of Social Security, José Luis Escrivá, continues to seek financing to pay the pensions of the ‘baby boomers’. This week he closed a pact with the unions to raise the contributions to companies and workers by 0.6% and yesterday announced that next year the maximum pension will increase, now by 2,707 euros, after ‘uncovering’ the maximum contribution bases, now at 49,000 euros per year (4,070.10 euros per month).
The minister advanced that both decisions will go in parallel after criticism received for the lower intergenerational equity of the pension adjustment mechanism – since it places the cost of guaranteeing the retirement of the pension on the backs of young people. ‘baby boom’– and by the darts that point to the attack on the contributivity that will suppose the stop of the contributions of the highest salaries committed by Brussels.
The ‘destope’ of the maximum bases is a commitment acquired with Brussels to apply in the second part of the pension reform, the toughest, together with the extension of the years that are taken into account to calculate the retirement. This last measure will mean a cut in the pension, which the minister intends to neutralize in some cases, leaving free choice of the most beneficial years for the calculation.
Currently, employers and workers contribute to the Social Security 28.3% of the salary of each worker -23.6% is paid by the employer and 4.7% by the employee-; This is what is called the contribution for common contingencies. And what is collected with this contribution constitutes the main source of financing for the pension system. However, this type of contribution of 28.3% does not apply to all workers’ wages, but rather has a minimum floor and a maximum ceiling that the law sets each year.
The two-party agreement closed between Social Security, UGT and CC.OO. represents an increase in contributions for common contingencies of 0.6 points from 2023 to 2032, of which half a point will be paid by the employer and 0.1 by the worker.
The rate hike has already caused the government a confrontation with the business organization, the same will happen with the ‘clutter’ of the maximum bases, which threatens to turn the second tranche of the pension reform into a new powder keg. “Increasing social contributions and making the greatest burden fall on companies has negative effects on employment and goes in the opposite direction to what the public pension system needs,” lamented the employer in a statement on Monday in which they alighted of the agreement on the mechanism.
The parliamentary processing of the regulation has also started with controversy. The Government has imposed an express calendar that could even end with the rule approved next week and that has raised the rejection of parliamentary groups, including members of the Executive. Yesterday the presentation was constituted and the commission was set for Friday, which would approve the opinion, with the idea that next week it can go on to Plenary of Congress and from there to Senate. The discomfort is notable in several of the groups consulted by this newspaper, which also point out that the amendment period ended on October 27 and that the norm has been registered since September.
The reason for anger is common to all groups, who consider a “outrage” and a “shame” to be the most important reform for the Welfare state an attempt is made to “camouflage” with the processing of the Budgets and in a minimum period of time. In any case, there are still doubts in the government on how to articulate the amendment that should include the content of the equity mechanism, due to the dizzying pace imposed by the circumstances. One of the options being considered is that it be presented as an ‘in voce’ amendment. In addition, there are misgivings among the groups about the scope of the measures raised by Escriva. The minister has ensured that, taking into account the historical average returns, the Reserve fund It should count at the beginning of the 2030s with between 40,000 million, something that is questioned.