The European Commission’s Aging Report, published on Friday, predicts that Spain will have to allocate a higher percentage of its GDP to public pensions in the coming decades. This change is mainly due to measures approved by former minister Jose Luis Escriv, including annual pension revaluations based on inflation. These increases in spending are expected to have a significant impact on Social Security accounts.
The reform introduced by Escriv aimed to maintain the purchasing power of pensioners and ensure that pensions would not lose value in the future. However, despite these efforts, the increase in public spending on pensions is forecasted to rise significantly over the years, reaching a peak in 2051.
While these measures will result in more spending on pensions, other initiatives, such as increases in contributions and changes in pension calculations, are designed to generate more income for the system. The overall goal is to maintain the sustainability of the pension system by balancing income and expenses.
Despite these efforts, however, the system is still expected to face a budget deficit, which will worsen over time. To address this issue, the reform includes provisions for automatic adjustments based on evaluations by the Independent Authority for Fiscal Responsibility (AIReF).
In addition to these measures, other initiatives are being considered to address Spain’s aging population and support long-term sustainability of the pension system. For example, some experts recommend increasing the retirement age or introducing flexible work arrangements for older workers. However, any changes would require careful consideration and consultation with stakeholders across society.
Overall, while there may be challenges ahead for Spain’s pension system as it faces an aging population and rising costs associated with public pensions
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