Tension in the Government due to the Brussels review of the pension reform

"There is concern, of course, but also the conviction that there are sufficient arguments to defend the sustainability of the pension system." This is how a source in permanent contact with Social Security summarizes the presence of mind of the Ministry in the face of the visit that officials from the European Commission will carry out this coming week to assess the progress of the reforms committed by the Government within the Plan for Recovery, Transformation and Resilience and, more specifically, the reform of the pension system. Technicians of the working group created to monitor the milestones and objectives committed by the Member States within the European Recovery Mechanism, under the direction of the Spanish Teresa Fábregas, and the Directorate General for Economic and Financial Affairs of the European Commission , under the command of Irishman Declan Costello -those who during the financial crisis were nicknamed 'the men in black from Brussels'-, will be in Spain between Monday and Wednesday gathering information on the measures and their expected impact on the economy . From Economy and Social Security the visit is framed within the "ordinary meetings" that are held with Brussels to comply with the follow-up of the Recovery Plan, but other sources consulted from the social, political and economic fields convey a very different perception that speaks of a certain climate of tension before the exam in Brussels. Pensions in focus "They come, basically, to check how the pension reform is going", admit sources from one of the institutions with which the European Commission has contacted to form an opinion on the state of the situation in this area, which Today, it constitutes the main focus of concern in Brussels regarding the reformist commitments agreed with the Government of Spain. Related News standard recovery plan If Europe distrusts the forecast of pension savings with the measures of Escrivá Gonzalo D. Velarde The authorities see the risk that the Government reform will open a fiscal hole The examination will in fact be exhaustive. The European Commission delegation has not only met with representatives of the ministries most concerned with the reforms, such as Inclusion and Social Security or Economic Affairs, but also with social agents, with other institutions and public authorities and even with analysts to form as rich an opinion as possible about how the advances being made in the reform of the pension system are perceived. The ministry of José Luis Escrivá conveys a message of tranquility. They admit that the interest of the Commission is not only to know how the already approved reforms are working (hardening of early retirement, revaluation of pensions with the CPI, Intergenerational Equity Mechanism, incentives to delay retirement...) but also to check the advances in those that remain pending (extension of the calculation period for the pension and increase in the maximum contribution bases), where they recognize "some technical discrepancies". They underline, however, that Brussels' concern about the sustainability of the system in Spain is no greater than that which exists in other countries such as France or the Netherlands. A halfway reform The European Commission already anticipated during its visit to Spain last year around this time that it was going to carry out a meticulous follow-up of the measures approved by the Government in the field of pensions after the first phase of the reform will not convince them in terms of its impact on the future sustainability of the system. The delegation of the European Commission left Spain in October 2021 refusing to carry out an analysis of the Government's pension reform until it was complete and demanding an automatic adjustment device for pension spending to replace the Sustainability Factor in a when Social Security negotiated the Intergenerational Equity Mechanism (MEI) with social agents. The Government finally gave birth to its MEI and Brussels did not like how the Commission made it clear in the preliminary declaration that gave rise to the second payment of the funds associated with the Recovery Mechanism. "The Spanish authorities have estimated that the substitution of the Sustainability Factor for the Intergenerational Equity Mechanism will be fiscally neutral", Commission officials pointed out in that document released just two months ago, "while the Commission services consider that probably will lead to a significant increase in public spending over GDP over time. It was pouring rain because the Commission had already warned the Government of Spain that linking pensions to the CPI would imply a significant increase in spending "which will require the introduction of compensatory measures that will be adopted in 2022 in accordance with the Recovery Plan in order to to mitigate the risks to fiscal sustainability in the medium term. We are in September 2022 and Escrivá has part of the work to do. It has given birth to a reform of the self-employed contribution system that does not seem to contain the annual cost that this regime entails for the system and two levers are pending now under negotiation: the possible increase in the period taken as a reference to calculate the pension, that according to the minister will not be 35 years; and the increase in the maximum contribution bases to achieve more income, which seems to be the main argument of the Government to balance the accounts of the system.

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