SPAIN – Forthcoming elections have put a hold on Spain’s pension reform, says investment consultant Mercer.

“I do not think that these decisions regarding the national pension fund are taken in the midst of an election campaign,” said Mercer Investment Consulting director Constantino Gomez. Spain goes to the polls in 2004.

The Spanish press has reported that a career-average formula for calculating state pension benefits - a goal of the government’s Toledo Pact pension reform consultations – is now off the group’s agenda. The 13-strong Toledo group is headed by Jesus Merino Delgado of the ruling Partido Popular.

Merino is also quoted as saying the formula had an unintended consequence of penalizing those with a longer history of contributions.

“There are things to be decided,” said Mercer’s Gomez. “All are agreed that reforms needed to be implemented. But there are elections round the corner.”

At issue, he says, are Spain’s seven million pensioners out of a population of 40 million. He adds that there is a broad view that something needs to be done, as attested by supranational bodies such as the Organisation for Economic Cooperation and Development which have called for pension reform in Spain.

“Important decisions need to be taken,” Gomez said. “ The unions have a pretty open attitude to attain what needs to be done.”

The Toledo group is also reported to have agreed that when companies offer early retirement they should assume full responsibility for pension income in the years preceding normal retirement age.