The sustainability of the public pension system has returned to the center of the economic debate. The Foundation for Applied Economics Studies (Fedea) has estimated that all those born after 1992 will be harmed by the reform promoted by former minister José Luis Escriváin which younger workers will face higher contributions and tax burdens. That is, young people today will pay more, but they will earn less when they retire.
A warning that adds to the voices of economists who question the financial viability of a system that has a growing imbalance. In this case, economist Gonzalo Bernardos argued that Escrivá’s reform “has not managed to increase contribution income or reduce the deficit, since more and more people are retiring and the new pensions are higher,” during an interview on the program ‘The critical view’ from Telecinco.
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“The new retirees already earn, on average, close to 2,000 euros,” Bernardos pointed out and estimated the system’s deficit at around 65,000 million euros, warning that “to fill this hole, the new generations are going to be fried with taxes.”
The professor stressed that the reform aggravates the burden on young people, since “it means paying more for social contributions, paying more for taxes and receiving much less than what current retirees receive, because pensions are too generous“, he stated. According to his diagnosis, the system is trapped between electoral pressure and the lack of structural reforms, since “no one dares to touch pensions over the issue of voting,” he said.
Compare with retirement in other European countries
Bernardos proposed alternatives already applied in other European countries. “Or we retire later, like in Denmarkwhere in 2040 the retirement age will be 70 years, or we collect less pension, as in Germany, where the State offers a subsidy of 10 euros per month to children to encourage savings,” said the economist, aware of its unfeasibility, since it would affect “the majority of voters.”
At this point, in his opinion, the Government has opted for “a reform of the system that has failed” and that “makes the situation of young people worse so that the elderly retain their privileges.”
“Another more ‘fake’ measure from Escrivá”
The economist also referred to the mandatory deduction that will continue to increase on January 1, 2026 through the Intergenerational Equity Mechanism (MEI)an additional contribution intended to reinforce the Social Security Reserve Fund, which will involve a reduction in payrolls of up to 95 euros monthly.
“It affects all of us workers, because starting that year two contributions will be made to Social Security: one will be the lifetime contribution and the other, an additional contribution for a pension piggy bank,” Bernardos explained, questioning its effectiveness.
“It is another ‘fake’ measure by Escrivá, because it tells you that with that piggy bank you will be guaranteed magnificent pensions in the future and what you are guaranteed is four euros. It is a deception.”
“The story is that 100 euros more for all payrolls, if you multiply it, is not even a patch,” said Beranrdos, recalling that the Social Security reserve fund, which accumulated 70,000 million euros during the Government of José Luis Rodríguez Zapatero, “was exhausted and today it barely retains a fraction of that figure.” In his opinion, “the idea was to give sustainability to something that does not have it and Escrivá knew it, but it was what he had been ordered to capture the vote of retirees,” he concluded.