August 5, 2020

Fedea proposes to raise pensions according to the CPI and the financial health of the system



Fedea proposes updating pensions through a rule that would take into account the CPI and the financial health index of the system (difference between income and expenses), which would have less drastic effects than the current IRP of 0.25%.

As explained today by the director of Fedea, Angel de la Fuente, the financial health index of the system is currently 0.85%, that is, the system enters 85% of what it spends, a fact that should be taken into account in the revaluation of pensions.

"This mechanism would help curb spending when things go wrong and increase it in case of surplus," said De la Fuente, who has considered that in this way pensioners "will become shareholders of Spain SA".

Only minimum pensions should be revalued according to the CPI, considers Fedea, even if it means breaking the principle of contributory system, which would be "a lesser evil", while also betting on maintaining the sustainability factor or linking the minimum age of retirement with the "life expectancy in health".

Likewise, Fedea advocates extending the computation to calculate the pension to all working life, as well as establishing the relationship between what is charged in pensions and the contributions made, capitalized according to the growth of the economy, through notional accounts.

For Fedea, abolishing the pension reform of 2013 without alternative measures "would not be prudent", for which it proposes a realistic and detailed plan of income and expenses to guarantee the financial equilibrium of the pension system and a balanced distribution of the efforts required "to be viable.

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