SPAIN – The Spanish government has tapped into the Social Security Reserve Fund for the third time to pay extra summer pension payments, and is expected to do so again later this year, the director of the country's pension fund association said.

Angel Martínez-Aldama, director of the country's investment and pension fund association (INVERCO), told IPE that prime minister Mariano Rajoy's government took €3.5bn from the reserve fund in June to pay extra summer pensions.

The move comes as the Social Security accounts traditionally used to pay pension income to Spanish retirees face severe shortfalls due high unemployment.

However, according to Martínez-Aldama, this use of the reserve fund is in line with its initial goal.

"There is nothing abnormal about tapping into the fund," he said. "That is precisely the reason why the fund was launched in the first place, back in 2000."

At the time, the government, led by José María Aznar, said it was launching the reserve fund to offset future shortfalls at Spanish pension schemes.

Martínez-Aldama went on to say that the reserve fund was supposed to make 14 payments in total this year to pay pensions.

While one payment is made each month to finance Spanish pension incomes, two additional payments are expected to be made twice this year to cover extra needs.

But Martínez-Aldama conceded that tapping into the reserve fund for extraordinary payments could lead to "some problems" in the future if the country's economy does not improve.

"However, the economy seems to be improving slightly," he said.

"The Bank of Spain published new data yesterday showing the economy only decreased by 0.1% in the second quarter this year, compared with the 0.5% fall recorded in Q1."

Rajoy's government took €3bn from the fund to cover "unspecified Treasury needs" in September last year, before withdrawing another €4bn two months later, in November.

According to the Labour Ministry, the reserve fund is now worth €59.3bn, equivalent to 5.65% of gross domestic product.