Escrivá defends a new increase in the maximum pension gradually
The Minister of Inclusion, Social Security and migrations, Jose Luis Escrivaconfirmed yesterday that the Government is working on a maximum pension increase “in a very gradual and smooth way.” “Spain is an anomalous country. We have a relatively low maximum pension and we are working, in a very gradual and gentle way, to increase the maximum pension over time and, simultaneously, the existing maximum contribution”, said the minister at an event organized by 65ymás.
Write has ruled out that a new reform of the pension system will be necessary, since the one proposed by the current Executive was thought “to be as complete as possible”. That reform still has “two elements” pending. One of them, which must be closed before the end of the year, is a recommendation of the Toledo Pact aimed at equity, which “has no aggregate effect on pension spending.”
The head of Social Security has explained that professional careers are no longer “as linear” as in the past, and that means that the last years worked are not always the best, which at the same time “generates a problem of inequity” in the system. “If someone wants their entire working life to be taken into account more in terms of their last best years, we must look at the length of the calculation period, but also the possibility of eliminating the worst years and also working on the treatment of gaps, such as when a person is not in the market”, pointed out the minister, in favor of working “with different parameters”.
Maximum pensions: neutral in long-term spending
Regarding pensions and maximum contributions, Escrivá maintains that it is “neutral in spending” in the long term, since it is first collected in contributions and then pensions are recognized. The other pending item is delayed retirement incentive and study other modalities such as partial and active retirement and “give it all a spin”. The minister has compared the situation in Spain with that of other neighboring countries. So while a Spanish employee works until the last day of his working life and then retire, in other places “the exit is done gradually, working fewer hours.”
In defense of pension reform
Write has defended the current pension reform and its revaluation according to the CPI, since this gives “certainty” to retirees and allows them to maintain their purchasing power. The minister has criticized those who now question this formula, despite having previously approved it in the Toledo Pact, and has accused them of raising an “extemporaneous” debate.
“In recent weeks we have seen positions, from different instances, recommending, even quite vehemently, that pensions should not be revalued with the CPI, despite the fact that it is a law that must be complied with and has a very broad consensus”, has underlined. He has also insisted that proponents of this position “they never proposed” another alternative in the Toledo Pactnot even the escape clause that they are now proposing.
“It is being considered now, at the last moment and without sufficient reflection. It does not make much sense,” the head of Social Security has settled. The minister has insisted that the new law, by which pensions are revalued according to the CPI, has the consensus of the social agents and the Toledo Pact, and will also be fulfilled this year. The minister has insisted that the new law, by which pensions are revalued according to the CPI, has the consensus of the social agents and the Toledo Pact, and will also be fulfilled this year.
“In November 2021, average inflation was 2.5% and pensions were revalued by 2.5% in 2022. We are in November, we have a few days left to know average inflation and it will not be far from 8, 5%, tenth up, tenth down That 8.5%, more or less, It will be the one that supposes the revaluation of pensions in 2023“, Escrivá stated. The minister contrasted this increase with the one that would have occurred if the new reform had not existed. In that case, the Pension Revaluation Index (IRP) would have been applied, which would have meant “the loss of purchasing power”. Escrivá also has failed the 2013 pension reformduring the mandate of the popular Mariano Rajoy, which was approved “without consensus and without agreement with the social agents”, and which, in his opinion, “generated extraordinary uncertainty in pensioners”.
Sustainability of the pension system
In an “increasingly uncertain” environment, Escrivá believes that now is not the time to “raise pension issues without evidence”, since it only contributes to generating “unfair certainty about pensioners”. The minister has assured that Spain has “a framework with very important reforms”, agreed with the social agents, from the consensus, to provide certainty.
Escrivá has guaranteed that these works are focused on guarantee the sustainability of the systemso that it is “robust over time” and responds to the aging of the population in the coming years”. The Government’s objective is to increase the fairness of a pay-as-you-go and contributory system, and reinforce the elements of solidarity. has guaranteed the dynamism of the system by the recovery of the labor market, with the creation of 400,000 net jobs since the beginning of the year, and with the reduction of the Social Security deficit since 2017. The minister has announced that this year it will close at 0.5% and it is expected to repeat that figure in 2023.
spending on pensions
Regarding spending on pensions, the minister finds that “the main problem” will be in the 2030s and 2040s, when “a very broad generation followed by a narrower one” will retire. However, as of 2050 “pension spending declines again”, because the following generations are once again of a similar size.
Escrivá has pointed out that the Intergenerational Equity Mechanism (MEI), to which Spain has committed before the European Commission, is designed to deal with this expense in future decades, with an overcharge of 0.6% until 2032. ” Later we will see”, added the minister, who explained that the function of the MEI is to generate savings of greater endowment to the reserve fund for when the periods of greatest tension in the system arrive.
The minister has compared the MEI with the sustainability factor of the 2013 reform, which in his opinion left improper expenses unsolved, sharpened the level of correction and cut the pensions of the youngest contributors. Escrivá stressed that there is no “European pension model” and that Spain’s commitment to Brussels “is sustainability.” “A pension reform, by its very nature, has to transcend many governments. That is why the Toledo Pact is so important, it is an asset that must be widely preserved and respected”, he added.
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