The Ministry of Inclusion and Social Security has completed the last remaining milestone of the conditions set by Brussels regarding pensions. Deliver projections of public spending on pensions until 2050 to demonstrate that the system is sustainable. It will be one of the elements that the European Commission will assess when deciding on the fourth payment of the Recovery Plan of 10,000 million that the Spanish Government must request in the coming weeks.
The ministry's calculations are that average spending on pensions until 2050, corrected by new income, will be 12.4% of GDP. As an expense it would be 14.2% of GDP, but once the increase in income expected from the new measures is applied, the percentage is reduced by almost two points. An effect that, for Social Security, demonstrates the effectiveness of the measures that have been introduced to increase this income.
This increase in income is the key to the sustainability of the system. Measures such as the Intergenerational Equity Mechanism, the RETA reform, the increase in the maximum bases, the solidarity quota and the labor market reforms will represent 1.8% of extra GDP income on average in the period 2022-2050 . These are the numbers that, according to Inclusion, support its mantra of undertaking the sustainability of pensions not through cost cuts, which was usual, but rather through increased income.
In this way, they affirm, it would not be necessary to apply the emergency mechanism that is provided for in the reform, due to demands from Brussels, to automatically increase contributions in the event that there is a certain level of deviation. Specifically, the mechanism is activated if spending reaches 13.3% of GDP, and according to Inclusion, it will remain at 12.4%
One of the debatable points of the report is that it is based on a more optimistic macroeconomic picture than the one considered by the Tax Authority. To begin with, Social Security foresees a higher average growth in the period 2023-2050, with a real GDP of 2% and a nominal GDP of 4.10%; while the Airef leaves it at 1.13% and 3.48% respectively. There are also differences in employment, where Social Security calculates a reduction in unemployment, which would drop to 6% in the decade from 2041 to 2050. It would be the end of a progressive reduction with 11.4% between 2023 and 2030 and 8 .7% between 2031 and 2040.
Another significant difference is productivity, for which Social Security foresees an average growth of 1.5% while Airef leaves it at 1.10%.
