The Foundation of Applied Economics Studies (Fedea) urges to rethink the last pension reform, which was regulated through Royal Decree-Law 2/2023. In his opinion, the approved measures aggravate the sustainability problems by “considerably” the expense without sufficient compensations or by the income or that of the savings.
The analysis, signed by Alfonso Sánchez, Ángel de la Fuente and Miguel Ángel García, uses an updated version of his public system simulation model. Their projections point to a significant increase in spending that would exceed 18% of GDP around 2050. At the end of the study period, the curve would recover again and could mark another maximum between 2070 and 2080.
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According to Fedea, the first phase of the reform, which restored the indexation of pensions to the IPC (which is why the famous Paguilla de las Pensions was stopped), explains most of the increase. The second phase with maximum bases and quotes, minimum reinforcement and the new dual calculation method of the race (since 2027, choose between 25 years or 29 discarding two) – would add pressure, especially from 2050.
While the total expenditure in 2050 would scale up to 18.5% of GDP, system revenues would grow much less, up to 10.35%. The basic deficit (before State transfers) would exceed 8% of GDP from that date. With a high deficit and debt starting point in all administrations, Fedea concludes that pension spending control should gain prominence on the agenda.
Act in calculation and revaluation
For the Foundation, the current design is “excessively generous” in relation to available resources and growth prospects. With a life expectancy at 65 years of 21.2 years, which could increase 4.9 years by 2050, and with the relationship between retirees and active population on the rise, the average benefits would exceed what allows current salaries and types of contributions. Fedea also warns against the idea of covering the imbalance with “a blank check” of the General State Administration, due to the displacement effect on other public policies already tension, such as health, transport or emergencies.
To restore the balance, it proposes to redefine the mechanism of safeguarding the mei, so that its activation is AT the explicit limit to the basic system deficit (including passive classes), instead of the current conditions, which it considers opaque and lax.
Fedea defends to reduce the provision rate (pension on average salary) to European levels. To do this, it suggests extending the computation period until they cover all working life without discards, harden access and calculation parameters, recover a sustainability factor and automatically link the legal retirement age to life expectancy in good health once reached 67 years, with exceptions in physically painful jobs.
Limit armor to CPI
In revaluation, the Foundation proposes to maintain full protection against inflation only for the minimums and set for the rest a cap of accumulated loss of purchasing power throughout retirement, in order to gain policy margin when prices rebound.
Fedea considers likely that, even with these adjustments, additional contributions are needed. It is very limited to the resource to more debt due to the high current indebtedness and advise against abusing new raising increases due to its impact on employment and competitiveness.
A surcharge in the personal income tax to make the cost visible
As a complementary route, it suggests financing part of the reinforcement with a proportional surcharge on the IRPF state quota. In his opinion, it is the most equitable tax and would allow the real and opportunity costs of the system for the citizen, politically facilitating the discussion on containment measures.
In the medium and long term, Fedea invites you to study a model of notional accounts inspired by the Swedish, with profitability linked to GDP or the salary mass, which aligns rights and resources and ensures sustainability. He also asks to thoroughly review active retirement regulations to compatible pension and paid work with flexible formulas that encourage work life voluntarily.