SPAIN – The European Council has urged Spain to agree a timetable for the implementation of its planned pensions reform.

In its commentary on the update of Spain’s stability programme, the Council has expressed concern about “unsustainable public finances in terms of emerging budgetary imbalances in the long run”. The Council believes the risk stems from Spain’s large projected increase in age-related spending on public pensions.

In spite of previous recommendations, no major review of the public pension system has been undertaken, noted the Council. Spanish authorities have been urged to agree a timetable for “reaching policy conclusions and implementation of the envisaged reform of the pension system to align more closely contributions and benefits”.

Says the provisional Council opinion: “Assets of the public pensions reserve fund created in 2000 to finance future liabilities will stand in 2003 slightly above 1% of GDP, which compares to a target of 1% in 2004. New targets which will substantially reinforce the fund now need to be set if this fund is to make a substantial contribution to meeting the costs of ageing populations.”

A recent survey by la Caixa savings bank found that pensions were the main worry for 60% of Spanish people over 65 years old, with solitude and health the next biggest worries.

The European Council’s stability and growth pact of 1997 was designed to bring the euro-zone economies into line.

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