The retirement of baby boomborn in the 60s and early 70s, will cause the current Social Security pension system to falter. The process will begin in 2025, when those born in 1960 reach the age of 65 (retirement age in Spain) and can collect the full pension with 38.5 years of contributions.
In this, it must be taken into account that according to the latest unemployment data for the month of SeptemberIn Spain, very high employability figures are being recorded and there are approximately 2.34 contributors for every pensioner. A few weeks ago, Social Security published a report that stated that one person retires every 7 minutes and that the average pension is 1,506 euros. Does this make the current pension system sustainable?
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The Independent Authority for Fiscal Responsibility (AIREF) points out that pensions will be sustainable as long as the rest of the public administrations are sustainable. The viability of this benefit not only lies in social contributions but in what is collected by the State, which is the one that guarantees that there is money to cover this expense, as stated EFE.
Critical years begin in 2030
In 2030, the number of contributors (working population) will begin to decrease according to the predictions of AIREF, which has also highlighted that the presence of people over 60 years of age in the labor market will increase. A trend that is already being seen in some countries such as USA and is expected to last about two decades. In 2050, there will be more working-age population.
For its part, the INE (National Institute of Statistics) also points out that in 2050 there will be 16.5 million people over 65 years of age, compared to some 27 million of working age. To monitor the sustainability of the system, the last pension reform included a triennial review.
In the first of the evaluations, the AIREF indicated that it had not been considered whether the State should increase contributions through transfers that could triple their weight on the GDP (Gross Domestic Product) in 2050.
The Government highlights that the peak of pension spending will reach 14.7% of GDP in 2050 compared to 12.9% in 2022, while Airef increases it to 16.1% of GDP and study centers such as Fedea places it two points higher.
Escrivá defends the sustainability of the pension system
The Governor of the Bank of Spain and former Minister of Social Security, José Luis Escrivá, has highlighted that in Spain it is not possible to change the current system of common cash distribution in which the contributions of active workers are those that pay the pensions of retirees.
The proposals made by the study centers, he explained, must take into account what institutional framework they are addressing.
He defended that in his pension reform, where pending issues such as flexible retirement remain, he ensures that the peak in spending expected in 2050 can be exceeded thanks to the improvement in income and improvements in the labor market that have raised the retirement age to 65 years.
But, taking the data from the CIS (Center for Sociological Research) as a reference, what can be seen is that the majority of the population does not consider the future of pensions as one of their biggest concerns. 4.1% do place it among their concerns, far from others such as housing, health or employment.