May 16, 2021

Social Security debt will exceed 65,000 million this year

Social Security debt will exceed 65,000 million this year


The escalation of spending Committed by the Social Security will cause that this year the debt contracted with the State exceeds 65,000 million euros. A figure that reflects the critical situation that the forecast system is going through, which has accumulated since 2011 red numbers in your accounts year after year. A scenario that has pushed the agency that pays pensions to borrow in figures of vertigo to pay bills.

The Bank of Spain places the debt of the protection system with the State at 34,863 million up to the third quarter of 2018. To this amount it is necessary to add 13,830 million that the State loaned that year to Social Security that are not reflected, and another 1,400 more than were approved last December to face the 1.6% rise and the mini-pay that pensioners will receive before April for compensate for the price deviation. That is, the total amount would reach 50,093 million, an amount to which, in turn, the new loan which the Government will resort to meet in 2019 with retirees.

The worst case scenario

The credit that will collect the General State Budgets that are presented today in the Congress of Deputies is 15,000 million, the equivalent of 1.2% of GDP. After this new financing line, the Social Security debt will climb above 65,000 million. A scenario, however, optimistic for the sources consulted by ABC, which raise above 20,000 million the needs of which this exercise will have the system, forecast that if fulfilled would raise 70,000 million the total debt. A historical figure

This greater recourse to indebtedness is explained by several factors. Despite the vigor with which the contributions grow they are still insufficient for deal with payments, specifically to extraordinary payments because the monthly payroll is covered with those fees paid by employers and workers. The payment of the extras in summer and at Christmas retired people provoke strong tensions of treasury that have so far escaped with the recourse to the Reserve Fund, which barely has 5 billion left after the department led by Magdalena Valerio will take more than 3,000 million to pay the last extra pay of the year. Virtually closed the path of the "piggy bank" of pensions, the only recourse left to public officials is to resort to financing in the markets.

Ascents of 1.6% and 3%

In recent months they have assumed spending policies that have a strong impact on the Budget. The last agreement agreed between the previous Government of the PP and the PNV raised the minimum and welfare pensions by 3% and the rest by 1.6% – above the 0.25% established by the law – in addition to increasing widow's pension. A boost that the Sanchez Executive will replicate this exercise. The Government has interpreted the opinion of the Pact of Toledo and after suppress the Revaluation Index, which limited the rise in benefits to 0.25% while Social Security were in deficit, has committed to pay a compensatory pay between the increase applied last January and the evolution of prices between December 2017 and November 2018, which was 1.7%. Difference of an additional 0.1% that will pay in a pay that will have an extra cost of about 400 million.

The rise in pensions will not be the only extraordinary expense. The invoice of the payroll will be joined the expenses derived from decisions like the return of the partial retirement, which will cost about 2,000 million for the public purse or another 2,000 for expenses of temporary disability corresponding to the 2018 budgets that Labor managed to delay until the beginning of this year for strictly accounting reasons.

More taxes on employment

On the income side, the increase in taxes on employment will inject an additional 1,667 million into the public coffers. This year they have raised a 22.3% the minimum bases and 7% the maximum, but the price of contracts of less than five days also increases by 40%. The obligation that the companies already have to contribute to the general regime for the people who participate in the program will also be higher. formation programs, non-work placements or external academic practices, even if they are not remunerated, and the rise of the minimum contribution base for self-employed workers.

As this newspaper reported, the higher increases applied last year have raised the pension bill to unknown figures, and the deficit of the public system threatens to escalate, again, to historic amounts, which consular sources continue to place above the 19,500 million this year.


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