Escrivá's pension reform has a price and today the European Commission has put some figures on it. To begin with, they increase the cost much more and, according to these figures, the automatic mechanism may come into force, which represents an adjustment of 0.8% of GDP annually, that is, more than 11,000 million euros.
Brussels calculates that the set of measures adopted will mean an increase in pension system spending up to 3.3 percentage points of GDP, and that in 2070, the increase will be 5 points. The main element that causes this increase is the new indexation rules, which mean that pensions increase in accordance with inflation, which ensures that pensions do not lose purchasing power, but in exchange for a high bill. It is followed by the abolition of the stability factor that was established at the time of the Rajoy Government and that implied a resounding brake on spending.
These are two elements that were known to drastically increase spending and to compensate for this, systems were established to increase income, such as increasing contributions to the system as well as incentives to lengthen the effective retirement age. However, Brussels technicians consider that this compensation is more limited than what the Spanish Government had calculated.
These are data collected in the report on the impact of aging ("Ageing Report") published this morning by the European Commission. The report establishes a comparison between pension spending in the previous scenario and the current one, once the reforms already approved and in force or in the process of application have been applied. In the current scenario, pension spending would reach its highest level in 2050 (17.3% of GDP, 3.3 points above the base scenario), and from this peak it would be reduced, but only slightly, until reaching 16.7% in 2070, remaining five points above the base scenario.
The pension reform was one of the reforms carried out and accepted by the European Commission, to receive the funds from the recovery plan. The Spanish Government obtained approval from Brussels, after adding some automatic correction elements. Precisely, with the figures presented in the European Commission report, the automatic adjustment clause for the increase in contributions could have to be activated, which would mean an increase in the contribution of 0.8 points of GDP, which would mean an adjustment 11.7 billion euros.
