Who benefits and who is harmed by increasing the age from 25 to 30 years for calculating the pension

The intention of the Minister of Social Security to extend the years taken into account for calculating the pension from 25 to 30 years was widely criticized by trade unions and employers, and also sparked criticism within the government. Second Vice President and Minister of Labor Yolanda Diaz went so far as to say that the measure “represents cutting rights«. But does a reduction in pensions in the future actually mean an enlargement of the account? If the measure is analyzed in isolation, without taking into account other parts of the reform that could analyze it, the reduction in utility will occur in most cases. Traditionally, workers are paid better at the end of their careers, and if more years of working life are included in the pension calculation, lower salaries will be included, which in turn will lead to lower pensions later. In any case, the effect will be very different depending on the labor occupations of the workers.

The Women They will also be adversely affected by an extension of the pension calculation period, usually with shorter working positions, which in most cases is justified by childcare. But to mitigate this negative impact, Escrivá’s reform proposes better handling of contribution gaps.

Who will benefit most? It would obviously benefit those workers who were expelled from the labor market In the later years of his career, a situation that was recurrent in the 2008 financial crisis and is still encountered by many future retirees. With Escrivá’s proposal, those workers from previous years would be taken into account, with better contributions, to calculate their pensions.

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diminished wages

This situation usually occurs with older workers, usually over the age of 50. When they are unemployed, it is difficult for them to find a job, so they tend to be unemployed for more years. And when they do manage to find a job, the salary they are offered is often lower than what they had before they became unemployed.

Organizations such as the Bank of Spain put figures for this expansion. The establishment run by Pablo Hernandez de Cos The reduction in the amount of primary pensions was estimated at 5% after the increase from 15 to 25 years, which was carried out incrementally between 2013 and 2022. Enrique Divisa, one of the most authoritative voices in the analysis of the social security system, also quantified the effect. According to the calculations of the professor of financial and actuarial economics at the University of Valencia, the increase from 25 to 35 years that is taken into account for calculating pensions, the government’s initial idea, will improve sustainability, because on average, the initial pension will decrease by 8.8%.

The most positive aspect of Escrivá’s proposal is that 30 years are used to calculate the pension, a measure that will be applied between 2025 and 2038, Ignore the two worst quotes. For a worker, this option may improve their pension, and for Social Security it will mean more spending.

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