January 27, 2021

Fedea calculates an annual deficit of more than 3% of GDP if the pension reform of 2013 is repealed | Economy

Fedea calculates an annual deficit of more than 3% of GDP if the pension reform of 2013 is repealed | Economy

Repealing the pension reform of 2013 without further supposes an annual average deficit that would be between 3% and 3.6% of the GDP, according to a study of the Foundation for Applied Economics Studies (Fedea). "It would not be prudent," said its executive director, Ángel de la Fuente, who pointed out that finally carry out the plans of the Toledo Pact, there should be an "alternative, clear and well-studied" plan.

The parliamentary committee that discusses the issue of pensions, the Pact of Toledo, has agreed to propose the repeal of the revaluation of these benefits according to the financial situation of the Social Security. It is another step in what was agreed by the previous government, the PP, and the PNV to suspend this updating system and delay the entry into force of the sustainability factor that linked the initial pension of the retirees to life expectancy. Both measures were part of the pension reform of 2013.

Fedea's study basically analyzes what would happen if those measures disappeared without increasing public collection for pensions or making adjustments in pensions. The three researchers of the Foundation calculate that with this average annual deficit, between 3% and 3.6%, which would translate up to 2070 in a mountain of debt equivalent to 125% or 150% of GDP, to add to the debt that Spain already has, which is already around 100%.

The solution for Ángel de la Fuente, Miguel Ángel García, professor at the Rey Juan Carlos University and until months ago was the general director of Social Security Planning, and Alfonso Sánchez, goes through a combination of present and future sacrifices. Among those present are an increase in taxes and some adjustments in the benefits received by pensioners. The futures consist in a reduction in the "generosity" of the benefits, that is to say, that they are minor with respect to the last salary or the average salary. This, theoretically, does not have to translate into lower pensions if the workers' salaries go up.

The distribution of sacrifices between present and future generations seeks, the authors explain, that it is not only young people who have to take on the burden, either because of the debt they will have to pay, or because of the higher taxes and contributions they will have to pay. put up with. "The burden on these people may be too high and unfair in terms of generational distribution," added De la Fuente.

As explained by this economist, the situation could also improve if a large number of immigrants "well qualified" and Spanish speakers or if productivity rose a lot. But the authors believe that this situation is "unlikely" to occur, or not, at least, to the extent necessary for sacrifices were necessary in the future, when it is expected that pensions to pay in Spain will exceed 10, 5 million current to 15 million. "Recent experience does not suggest that it is very likely that we will have a miracle of productivity in the coming years, especially if we do nothing," he stressed.

Among the proposals of Fedea, "no pain", is that the minimum rise according to the IPC, but the rest are updated with an index that, in addition to the prices, also take into account the financial situation of the system.

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