SPAIN - The Spanish government will employ the €66bn Social Security Reserve Fund solely to pay pensions and not to finance regional debt, according to the country’s investment and pension fund association (INVERCO).

Angel Martínez-Aldama, director at the association, told IPE: “The government has withdrawn €3bn out of the Social Security Reserve Fund not with the view to helping Catalonia or any other region, but for paying pensions. This has always been the sole objective of the reserve fund and its only purpose, as stated in law.”

The reserve fund was launched in 2000 to meet the future needs of contributory benefits.

However, Martínez-Aldama did acknowledge that the government was still looking to buy bonds issued by indebted regions after Catalonia announced at the end of last month that it would request a €5bn credit line from the central government to refinance its debt.

In a recent interview with IPE, Towers Watson consultants David Cienfuegos and Gregorio Gilderozas described the government’s announcement that it planned to tap the reserve fund to “cover some treasury needs” as extremely vague.

Gilderozas said it was difficult at this stage to guess what the government might do with the fund.

“We are still waiting for more clarifications to come, as no previous talks have been held between the government and pension representatives to that aim,” he said.

Meanwhile, a study by Xafinity Consulting has concluded that Spain’s recent bailout by the European Central Bank played a “significant” part in bringing down deficits at UK corporate pension funds.

The consultancy’s corporate pension deficits tracker shows that deficits fell by £130bn (€162bn) in September.

It said the Spanish bailout and its easing of fixed interest yields on both corporate and government bonds “must be hailed as good news”.

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