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.
While these measures were intended to maintain the purchasing power of pensioners and ensure that pensions would not lose value in the future, they are also expected to result in more spending on pensions. However, 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 the planned increase in income, the system is still expected to face a budget deficit, which will worsen over time. To address this, the reform includes provisions for automatic adjustments based on evaluations by the Independent Authority for Fiscal Responsibility (AIReF).
The European Commission’s Aging Report highlights the importance of addressing pension sustainability issues across Europe. As populations age and life expectancy increases, countries must find ways to balance their budgets while ensuring that their citizens receive adequate retirement benefits. The report calls on governments to take action now to address these challenges and ensure long-term sustainability for their pension systems.