The Spanish prime minister, José Luis Zapatero, has announced an increase in state pension payments in a sign of his confidence in the public pay-as-you-go system.
Pensioners on the lowest level of benefits will see their incomes rise by at least 6%, double the rate of inflation. While those supporting a spouse will see an increase of 8%. Other pensioners will see their payments rise in line with inflation.
Zapatero says that he expected the increases would effect around three million pensioners and cost the social security system around E400m. It is the biggest increase in pension payments since 1987.
He intends to meet with union leaders to get their approval for the increases in order to maintain the spirit of the Pact of Toledo, the cross-party agreement which governs the development of the Spanish pension system.