The latest proposal from Escrivá increases the extra contribution to support the pensions of the ‘baby boom’


The intergenerational pension equity mechanism continues to be negotiated. Minister Escrivá has raised a little more his proposal to increase the Social Security contribution paid by companies and workers to form a “cushion” of income guarantee for the retirements of the baby boom. The Social Security has raised to the social agents this Monday that, instead of an increase of 0.5 percentage points as you proposed at the beginning, this additional contribution of the “intergenerational equity mechanism” reaches 0.6 points for ten years, union sources explain.


The Government proposes a temporary increase in contributions to guarantee the pensions of the 'baby boom'

The Government proposes a temporary increase in contributions to guarantee the pensions of the ‘baby boom’

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The distribution of this additional contribution would be “0.4 additional points” for companies and “0.2 points” for workers, they explain in UGT.

The majority unions have highlighted in a joint statement after the meeting their “positive assessment of the shift in the government’s position” by centering the definition of the equity mechanism “around an improvement in income” of the system and not on pension cuts, as did the sustainability factor approved by the PP in 2013.

However, CCOO and UGT have also stressed that “the Government’s proposal must be improved in terms of sufficiency, providing more income, distribution of the additional contribution between the company and workers, not predetermining future negotiations within the Social Dialogue, if necessary, in addition to advancing in all matters pending development of the Pension Agreement of last July “.

In the bosses they have not spoken for the moment after this last offer of the Executive, but the industralists already expressed last week their opposition to quote more.

The deadline for an agreement is Monday

After this new proposal from the Government, the parties to the social dialogue will continue negotiating “in the coming days,” explain from the Executive and the unions. The deadline to reach a social agreement is running out: the limit set by the Government ends on Monday, November 15. If the parties do not reach a consensus, the Executive will incorporate the so-called ‘intergenerational equity mechanism’ (MEI) solo.

The mechanism intends –together with other measures– to guarantee the sustainability of the public pension system in the face of the challenge of increasing spending for the retirement of the numerous generation of the ‘baby boom’. The measure will replace the “sustainability factor” of the PP of 2013 (which is repealed), but with a change of focus. Instead of betting on cuts in pensions, the coalition government advocates that the mechanism affects an increase in the income of the system.

Last week Social Security raised its MEI proposal, which has two phases. The first consists of approving an additional contribution during the next decade (2023 to 2032) that would go to the Reserve Fund, known as the “pension money box”. The objective of this additional contribution –of 0.6 percentage points according to the last offer– is to increase the funds available to pay pensions if necessary given the tension of the retirement of the baby boomers with a volume of workers not so numerous.

Escrivá proposes a second phase of the equity mechanism, in case this income “cushion” is not enough to face the increase in spending at the time of greatest tension (2050). The Social Security proposed that this second phase of the MEI could have an impact on reducing spending on pensions, but without specifying how to do it. This was left pending negotiation in the future, between the government of the day and the social agents, as well as the Toledo Pact.

This second leg does not convince the unions, who reject that the mechanism translates into future cuts in pensions. One of his first observations is that the extra price of the first phase seems “insufficient”, which could facilitate the deployment of the second leg of the MEI. And this – focused on reducing spending – would be at the expense of future rulers, something that workers’ representatives do not like either, with the precedent of past reforms such as that of 2013.

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