The Spanish government has warned that the current pension system needs to be reformed to guarantee stability after 2015.
Social security secretary Octavio Granado said recently that a reform would be “fundamental” to guarantee solvency beyond 2015, when the social security fund is expected to record a deficit of around e625m, or 0.04% of GDP. It could face “technical bankruptcy” after 2020, he added.
Reserves will be used to absorb the initial deficit until 2020, when the cost of pensions is expected to exceed contributions by e18bn.
The gloomy outlook was confirmed by an employment ministry study, which found that the social security fund’s surplus would be “diluted” until 2020, when it was expected to go into a deficit
The General Union of Workers (UGT) responded to the minister’s reform suggestion by saying that it was ready to participate in debate on changes to the social security system.
But simultaneously it published its own set of proposals, which include measures to give additional assistance to families to improve the work/life balance and more support for women workers.
“In recent years there has been little done in this direction,” the UGT said. “The effort of the state to finance social protection has stayed around 6% of GDP.” It added that “The delay in enacting necessary improvements operates against the public pensions system.”
In February, the European Commission said that Spain should embrace pension reform “more vigorously” to meet the ageing challenge and prevent the emergence of “unsustainable trends in public finances in the long run”.