SPAIN - The chairman of a key pension reform committee, Jesus Merino Delgado, has insisted that the country’s social security system is still solvent.
Merino is a member of parliament for the governing Partido Popular and chairman of the committee responsible for negotiating the Pact of Toledo, the cross-party agreement which drives reform of the pension system.
He said in an interview that economic growth was the key to maintaining the system in the future.
“Economic growth creates more jobs and that gives a lot of support to the system,” said Merino. “The economic growth of the last few years has allowed us to raise the level of the lowest pensions and build up a reserve fund.”
All the major political parties signed up to renew the Pact of Toledo yesterday after the 13-strong committee had taken submissions from a broad range of interested parties including unions, business and academics. It also looked at examples of reforms in other European countries such as France and Germany.
The extension of the accord adds a further seven recommendations to the 15 that were originally agreed upon in 1995. The new recommendations address disability, dependents, immigration, women’s entitlements, and the transfer of benefits between EU member states, as well as the future development of the pact.
The pact will be the foundation for further negotiations following next year’s general election which will aim to create legislation to back up the recommendations.
Asked specifically about consensus projections that the social security system would run into deficit around the year 2015, Merino said: “Ten years ago, lots of analysts were saying that the pension system was in danger and we wouldn’t be able to support it.
“That assessment was premised on the economic problems that Spain was experiencing at the time, and has since been proved wrong. If we can sustain the current rate of growth and the ratio of two workers for every pensioner then the system will be fine.”
He added that the private system had an important complementary role to play and acknowledged that it was still underdeveloped. “The tax advantages of corporate pension plans are very important,” he said. “But we must also work to educate people, especially in small and medium sized companies.”
Last month investment consultant Mercer said that forthcoming elections had put a hold on Spain’s pension reform. “I do not think that these decisions regarding the national pension fund are taken in the midst of an election campaign,” said Mercer Investment Consulting director Constantino Gomez.