The Spanish government has taken €8.7bn from the social security reserve fund – the highest-ever transfer – to pay for pensions and social security for the month of July.

The pensions system is chronically underfunded, and the government has been dipping into the reserve fund – the Fondo de Reserva de la Seguridad Social – for the past four years.

As of 1 July, the value of the reserve fund had fallen to €25.2bn, equivalent to just over 2.3% of gross domestic product, according to an announcement by the Ministry for Employment and Social Security.

The ministry said it was becoming normal to require extra financing each July because an extra payment – the summer bonus – was made to beneficiaries on top of their pension.

The Spanish press, however, has warned that the reserve fund could be used up by the end of 2017.

Tackling the deficit in the state pension system is likely to be a priority for Spain’s new prime minister following the country’s general election in June.

No single party won control, and the appointment of a new prime minister is still in progress.

In other news, Vidacaixa, SA de Seguros y Reaseguros, a member of Spain’s La Caixa group, has completed its purchase of the Spanish pension assets and liabilities of Barclays Bank.

Barclays Vida y Pensiones Compañía de Seguros (BVP) provides life insurance and pension products in Spain, Italy and Portugal.

Under the agreement, its €350m in assets under management and 35,000 customers in Spain are transferring over to Vidacaixa for an undisclosed sale price.

BVP has already sold its Portuguese insurance business to Bankinter Seguros de Vida, completed in April 2016, and its Italian life insurance business to CNP Assurances.

Barclays completed the sale of its Spanish retail bank to CaixaBank in January 2015 but continues to operate global corporate and investment banking in Spain.

Harry Harrison, co-head of Barclays non-core, said: “This is another positive step in reducing the cost, operational risk and capital allocation within Barclays non-core, swiftly following the sale of our Italian insurance business.

“We are making good progress and continue to focus on our target of reducing risk-weighted assets in Barclays non-core to £20bn (€23.6bn) by the end of 2017.”  

According to figures from Spain’s Investment and Pension Fund Association (INVERCO), almost all the assets sold by Barclays were in the third pillar and represent the savings of their banking client base, not workplace schemes.

Jon Aldecoa, a consultant at Novaster, said: “In general, foreign banks have not been able to set up retail businesses in Spain. The amount of pensions savings managed by Barclays was small, and its withdrawal will have no effect on the occupational pensions market.”