Concerns about the medium term solvency of the Spanish social security system have been actively discussed not only in Spain but also in Brussels. At the end of last year the European Commission said that the Spanish government was not providing enough detailed information regarding the long term sustainability of its public pension system and advised Spaniards to put more money into the reserve fund set up in 1998 to cover possible future underfunding of the system.
The reserve fund started receiving contributions four years ago and today has assets of around €60bn.
Currently this money is being held in different accounts of the Banco de España, Spain’s central bank, and not much has been said regarding the future investment strategy that the fund should follow.
Some professionals in the market are supporting the idea of outsourcing the management of these assets to external investment managers, following the steps of other European countries such as Ireland. “One possibility will be to select a pool of gestoras to manage this money, and this might happen soon, although no one is considering this seriously at the moment,” says Diego Valero at consultants Novaster in Madrid. “I think, under the current market conditions, both gestoras and the government feel this is not the right moment to make a decision, but it is an option they should be looking at in the near future.”
The government made significant contributions to the reserve fund this year, and it is expected that during the next few years the size of the fund will increase considerably. These contributions will not be enough to face the problems that the Spanish social security is expected to encounter around 2015, when the number of retirees will go up significantly.