August 3, 2021

Labor will review the purchasing power of pensions with the December CPI | Economy

Labor will review the purchasing power of pensions with the December CPI | Economy

The evolution of prices this year will increase the pension bill more than expected. When the budget was approved, a 1.6% increase was established. But the CPI at the end of this year will exceed that percentage. It will reach 1.9% in December, according to the government's official forecasts. Therefore, if you want the pensioners not to lose purchasing power, something to which this Government has repeatedly committed, they will have to compensate them. How much does that mean? 385.8 million, at a rate of 128.6 million, according to sources from the Ministry of Labor.

This pension update and revision mechanism was in effect until the 2013 reform was approved. But with a difference, then the CPI data for November was taken as a reference to check if the pensioners had lost purchasing power throughout the year and not December, as is likely to be done this year, point to Work. Taking the prices of the last month of the year, it is most likely that this bill for Social Security is lower as the forecasts indicate that the CPI will be lower in December than in November.

Three tenths more of the CPI

It must be borne in mind that compensating the loss of purchasing power has a higher cost than the retroactive payment that pensioners will receive in January, according to the tradition followed while the previous law was in force. Why? Because when the rise of 1.6% of pensions is calculated for 2019, it will be done on the assumption that this year pensions rose by 1.9% and not by 1.6%. That is to say, during the next year the price deviation of 2018 costs another 385.8 million.

This clarification has come at the end of the intervention of the Minister of Labor, Magdalena Valerio, in the breakfast information organized by Europa Press. In it, Valerio has not cleared this doubt, which they have clarified later in his team.

In that intervention, the minister has warned that she intends to take forward the measures contemplated in the budget plan: unemployment benefit for over 52 years and paternity leave of eight weeks, among others. "In life you always have to have plan A and plan B. The B is to recover certain rights that were eliminated by decree. We have prepared a battery of measures that will go on budgets or by decree. "

The deficit of the Social Security should be resolved in 2022

During his speech, the Minister of Labor also warned that Spain should reach 2022 or 2023 with the system of healthy pensions, since it will be then when there will be a greater number of retirements of the generations of the baby boom. "It is essential to strengthen the financial balance of the system," said the minister, who has opted to reorder income and expenses, so that social policies such as maternity and paternity benefits (which involve a cost of 2,500 million euros) are paid through the State.

On the revenue side, Valerio has acknowledged that the tax on financial transactions, which is expected to raise about 850 million euros a year to finance the pension system, will only give for a "discreet aperitif". "You have to inject income because it is not worth only with the financial transaction tax," he remarked.

In any case, he insisted that there are about 19 million people who work and monthly pensions are paid with what workers pay each month.

"The problem we have to face the payment of extraordinary pensions in June and December and that is where we have to bet on more jobs, more quality, more salaries, contributions and more people working," he added.


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