June 20, 2021

The Government believes that in the coming decades the increase in the legal retirement age should be considered

A look at the next decades, specifically until 2050, to detail the challenges facing the country. Also, to think of long-term strategies to deal with them. This is what the coalition government has done, which has presented a comprehensive document this Thursday addressing the aging of the Spanish population expected for the coming years. One of its consequences lies in the “challenge for the sustainability of our welfare state” and, specifically, of the pension system. The Executive proposes several measures to face the challenge, among which it stands out to encourage the population to work more years, but also collects the need to “assess” in the coming decades an increase in the legal retirement age.

The Government plans to increase the contribution of the highest salaries over 30 years in the pension reform

The Government plans to increase the contribution of the highest salaries over 30 years in the pension reform

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The legal retirement age is gradually increasing to 67 years, which will be reached in 2027. This was one of the changes in the 2011 pension reform, agreed with the social agents, in which it was agreed to progressively increase the age access to retirement. This 2021, the ordinary legal age to retire reaches 66 years. However, if a person has contributed for more than 37 years and 3 months, they can retire from the age of 65.

The Government is currently negotiating a pension reform, which it intends to approve in several phases between this year and 2023, and which has committed Brussels within the Recovery Plan. This package of measures does not address the extension of the legal age to access retirement, as highlighted by Minister José Luis Escrivá, but instead focuses on incentives and disincentives to promote voluntary delay in retirement. The objective is that the effective retirement age (64.6 years) is close to the legal age.

The view of the Executive until 2050 indicates that this may not be enough for the coming decades given the foreseeable aging of the population, for which the number of pensioners will greatly increase for years (with the retirement of the generation of baby boom) and there will be fewer young people and people of working age.

“In 2050, one in three Spaniards will be 65 or older, and for every person in this age group there will be only 1.7 people between 16 and 64 years old (today, there are 3.4).” It is noteworthy that the Government firmly concludes that “neither possible improvements in the birth rate nor a potential increase in immigration will be able to completely reverse this scenario.” Therefore, it is necessary to take other measures to sustain the pension system, the Government warns.

Retirement age beyond 67 years?

Specifically, the document states: “In the coming decades, and once the effect of the rest of the measures has been evaluated, the need to adapt the retirement age to the increase in life expectancy should be assessed, while paying attention to the health inequalities “.

The Government recalls that “Spain has already established the progressive increase of the legal retirement age to 67 years in 2027” and adds that, “although it is not a low threshold in the European context, it constitutes a static limit that may become obsolete at as longevity increases. ”

“An alternative way”; argues the Executive, “perhaps more in line with the differences that exist in people’s ability to extend their time in employment, is to act on the effective retirement age, offering incentives that are able to promote permanence in the job market after of ordinary age “. This line is the one that the coalition government has chosen for the moment, but acknowledges that it would be convenient to assess in the future that “need to adapt the retirement age to the increase in life expectancy.”

On life expectancy and the “health inequalities” that the document shows, the Minister of Social Security, José Luis Escrivá, has highlighted in some of his appearances the differences in the life expectancy of citizens based on their income , for example, so that those from more affluent neighborhoods or municipalities have more longevity than those from areas with fewer resources.

Clara bets on working more years

The document calls for this future reflection on the retirement age, but first other measures have to be taken and their effects seen. Which? The Executive bets on everything and in several chapters of the report to extend the work careers. That citizens work more years, since the forecast is that they live longer and in better health conditions. For the latter, it is necessary to invest in care and health policies, among other issues.

“This will involve overcoming outdated stereotypes about old age, adapting many jobs to the expectations and capabilities of older workers, and facilitating the reconciliation of pension with employment,” says the Government.

Spain is the second EU country with the lowest rate of workers aged 65 and overTherefore, the Executive considers that it is a path to be explored with a long journey. If the employment rate from 55 years of age is taken into account, Spain also presents data much lower than the European average. The Government is committed to greatly increasing employment in this group in the coming years. “The key to this new paradigm is the concept of ‘active aging’, understood as the process of optimizing the opportunities for health, participation and safety of people as they age, in order to improve their quality of life and wellness”.

The goal is to add more than 1.6 million active people beyond 55 years of age by 2050, which would result from “equating the activity rates of our population over 55 years of age to that of countries such as Sweden or Denmark, (…) something that will help enormously to mitigate the negative impacts of the fall in the labor force and to improve the well-being of millions of households, “the document states.

On this issue, the Government recalls that “the evidence points out” that increasing older workers “is not detrimental to the employment of young people, since the jobs carried out by both are complementary and not substitute.” The minister Escrivá has insisted a lot on this idea, with the example of countries with high rates of ‘senior’ employment and also of youth employment.

Among the measures that promote work at advanced ages, the Executive proposes adapting jobs, promoting training throughout working life, awareness campaigns “that promote a change in perception about old age, eliminating negative stereotypes and the prejudices that exist today. ”

It is also proposed to “improve the compatibility between pension and work”, also increase “the percentage of the pension enjoyed during the work phase” and give more “incentives” to companies that employ these people, such as through a “reduction of salary compensation linked to seniority “, among other measures.

More pension reforms will be necessary

Finally, the Government anticipates that “the debate on pensions, far from having concluded, has only just begun.” For this reason, in the coming years he points out that it is necessary to “continue with the reform of the public pension system to make it more sustainable., adapting it to the demographic changes (life expectancy) that are happening, and introducing periodic review mechanisms associated with changes in economic and labor dynamics “.

In this regard, the Government highlights some issues that it believes will have to be addressed. In particular, develop the supplementary pension system, which joins the public, through employment pension plans; influence active retirement; “rethinking” widow’s pensions given the incorporation of women into the labor market; adapt the calculation of pensions to “more discontinuous and heterogeneous” work careers and, as noted, valued the need to increase the legal retirement age.

“It is essential that decisions are taken as soon as possible that allow us to design the appropriate mechanisms to avoid abrupt long-term adjustments,” indicates the Government. Always, yes, through consensus in both the social and political spheres, through the Toledo Pact. “The path that is taken must be one that ensures justice and equity between different groups and generations (present and future),” defends the Executive.


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