The three weaknesses of the fix and how they affect you
It might be one of the problems with Pension reform It is at the level of communication. The government has distracted itself from the specific analysis of the fiscal impact, which would have at least removed doubts about how it could convince the European Commission of the importance of a series of measures that, although they would generate more income for the social sector. Security, it will not be enough to cover the increased expenses. Thus, the fiscal imbalances of concern today that forced the recent reform will be even greater in the medium term.
At this point, and trying to set aside the lengthy volume of numbers, projections and decimal estimates from the economic effects of the systems introduced by the government in the field of social security, there are three points clearly contradictory in themselves that explain the vulnerability and vulnerability. Clay feet from fix. So much so that no official body that delves into this financial analysis anymore does not foresee the need for complementary measures in just three years, when the Irv will have to make a preliminary assessment of the reform.
Rise with the consumer price index
In the first place, the income of workers who will have to pay pensions in the future grows to about three times less than the rate of increase in benefits. Specifically, when retirements in Spain recorded an increase of 8.5% by 2023salaries agreed upon in an agreement affecting 7 million pay workers 3.1% on average. It should be noted that the retirement of the baby boom group significantly increases the amounts of new benefits, which for the first time in history exceeded 1,600 euros per month on average in new enrollments, which means that this group of newly retirees have an income higher than 60% of workers current active ones.
This is perhaps the biggest discrepancy because it is exacerbated by demographics. Not only do existing contributors suffer less income increases than those who have to pay them, which is already a financial strain on the system, but also, as might be expected, these contributors will be fewer and fewer and the number of pension recipients will grow more and more. . In fact, the combination of the effect of the increase in life expectancy and the arrival of baby boomers in retirement will lead to Increase the number of pensions by 50%. Payable (from 10 to 15 million) at an average annual rate of 1.5% per annum until 2050.
As expected, linking pensions to the increase in the CPI will add an additional cost in benefits 36,000 million euross on more than 190.000 million which already represents a budget line.
“Increasing the contributions of one million workers to pay ten million retirees is not viable,” says the lawyer at Mercer and member of Ocopen, for the ABC. Antonio Mendes Peges, as a second element for the incoherence of the applied measures. And although he admits that more will be quoted in this way, he warns that it will not suffice and that the solution will be worse than the disease in this case. It should be remembered that organizations such as the Institute for Economic Studies (IEE) project a loss of 190,000 jobs due to the increase in labor costs.
Specifically, the measure to increase the maximum contribution rules will affect the 5% of the salaried population, i.e. just over 1 million workers with an income of more than 54,000 euros per year. And on their payroll they will be held accountable two-thirds From the expected additional collection through the increase in quotas – added at this stage the corresponding part of the intergenerational justice mechanism affecting all salaries – which is expected to reach 1.7 percentage points of GDP in 2050, according to official estimates.
Specifically, the 1,040,000 workers Thus, those who earn more than the maximum contribution base will be liable to contribute about 15,700 million euros more to social security from their payroll around 2050. While the tax gap (understood as the sum of the amounts withheld for personal income tax and social security contributions. will grow significantly Also) to an average of €8,800 per year in tax fees.
Finally, we find the major point of deviation from the established plan: the failure to extend the period of years contributed to the calculation of the pension. The measure committed by Brussels and the government called for adjusting spending in the pension item by collecting more contributions that would reduce pension amounts, will not give such a result in the end. On the contrary, it will add the possibility to choose the best 27 years from the last 29 years or choose the last 25 years 2,500 million spending for the system.
“It is assumed that the extension of the calculation period was to reduce spending and it would be quite the opposite,” warns the lawyer at Mercer, who stresses that in addition to the partial data, the outline elements do foresee problems with regard to the long-term sustainability of the public pension system. “It is not necessary to make large calculations to monitor this Measurements have short legs and limited efficacy,” Mendez-Paige points out.