OECD calls on Spain to reform pension system, increase retirement age
SPAIN - Spain has been urged by the Organisation for Economic Co-operation and Development (OECD) to reform its pension system and increase retirement age in an effort to combat a budget deficit of over 9%.
In an economic survey of the country, the OECD said that while recent moves to freeze pension payments served to appease markets, the fact that these measures only applied to 2011 left uncertainty.
It cited as a "high priority" a phased increase in the retirement age from 65 to 67 as this would generate a "significant" reduction on future pension spending in a country the organisation cited as having higher-than-average pension payments.
The report elaborated: "In the longer term, pension entitlement parameters, for example the statutory retirement age or pension benefits, should be indexed to changes in life expectancy.
"The government should phase in a revised pension benefit calculation formula that reflects the full working life of participants," it added, also calling on the government to proceed with plans to combine survivor benefits with other pensions at a time when more and more women were entering full-time employment.
The OECD further highlighted the problems of a subsidised early withdrawal from the labour market by some employees, urging the government to enforce the statutory retirement age.