The inflationary triennium will endorse 26,000 million of extra spending on pensions to the State

If the international situation allows it, it is assumed that Western governments will have managed to control the inflationary episode uncorked by the rise in energy and raw material prices and accelerated by the Russian invasion and its global economic impact, by the end of 2024. By then, Inflation will moderate to 1.8% in Spain in a global context of less growth in consumer prices due to the eventual decline in the war in Ukraine and the rebalancing of supply chains, which will allow production costs to be reduced and return the international economy to a certain state of normality. Transferring this scenario to the budgetary impact, due to the linking of future revaluations to the CPI by law, Social Security faces extra spending on pensions of more than 26,000 million euros in the next three years. That will be the cost only of the increases in each of the coming years, since, as the experts point out, the commitments that this revaluation path generates in the medium term compromise even more, if possible, the financial capacity of the system to meet its bills. According to the calculations prepared by the Research Group of Spanish Actuaries in Public Pensions, made up of fourteen experts and professors in the field, the cost of the 2023 pension increase will amount to about 1,740 million euros for each point of increase based on the CPI . Thus, given an average CPI -between December 2021 and November 2022- of 8.7%, the cost of the 2023 rise would amount to 15,329 million euros. As this medium recently advanced, to this cost must be added the result of the replacement of the pensions that leave the system, significantly lower than those currently registering, which are already close to 1,500 euros on average. In short, the bill for next year could exceed 17,000 million. However, this same effort will have to be made in the coming years to the dictation of the rule that came into force on January 1. By 2024, the increase in payments will be as high as the average CPI of 2023, and in 2025 the average increase in prices in the previous twelve months will be taken care of. Thus, the most adjusted forecasts, from Funcas and the Bank of Spain, estimate an average inflation of 4.8% for next year, to return to more usual values ​​in 2024, when an average CPI of 1.8% is expected. Desktop code Image for mobile, amp and app Mobile code AMP code 1370 APP code In this way, the cost associated with the increase planned for 2024 would amount to 8,160 million euros, and another 3,060 million would be added with the revaluation of 2025. In sum, with the more than 15,000 million in 2023, the inflationary three-year period will cost the State coffers 26,549 million euros to preserve the purchasing power of the more than nine million beneficiaries of a Social Security pension that currently exist in our country. Bearing in mind that the invoice for the revaluations of the just previous triennium (2020-2022) amounts to 6,200 million euros (with increases of 0.9% in the first two and 2.5% in the last of the series) the increase in pay for the next three years will quadruple that of the preceding three-year period. Calculation of the risk However, it is imperative to decouple the debate on the revaluation of benefits from the purely numerical question, which determines the volume of the disbursement, but which does not reflect the long-term reality of the financial health of Social Security. On the one hand, regarding current pensions, the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, has insistently guaranteed that they will be updated in November according to average inflation, as established by law, despite the rise in the CPI to throughout the year. The minister recalled yesterday that Social Security income is also increasing, with an increase of 8.5% in July in social contributions. «The balance between income and expenses only reflects an improvement in the situation. It is in a law that was approved in Parliament to give total certainty to pensioners," stressed the head of Social Security during a televised interview. At this point, the Group of Experts of the Institute of Actuaries evaluates in the 'Analysis of the pension reform 2021' the budgetary impact of the main measures introduced in the first package of the reform that has been in force for half a year. Here, the experts clarify that the maintenance of the purchasing power of pensions "is an objective that must be in the minds of all representatives of the citizenry", although they warn that "on the other side of the balance there must be a correct quantification of what this measure can entail and who will have to be the ones to assume that cost». MORE INFORMATION The new retirees already receive 50% more pension than the two million Spanish workers in SMI On this aspect, the experts question the design of the measure, which could "weigh down the financial sustainability" of Social Security. They claim that in the same way that the link mechanism with the CPI establishes an automatic pilot for the conservation of purchasing power with each increase in inflation, in the event of possible episodes of deflation - fall in consumer prices - benefits are tilted downwards , also complying with the principle of maintaining purchasing power. "This is a remarkable asymmetry that has already been applied previously, difficult to understand from a technical point of view," criticize the experts in the face of an analysis of the long-term impact of the main measure of increased spending.

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