The public pension system would need all the unemployed (currently 2,855,200, according to the latest EPA for the third quarter) to become members to achieve zero deficit. It is one of the conclusions of the analysis carried out by the BBVA Foundation and the Ivie on the future of pensions and Spanish demographic evolution, which points out that the demographic transformation, the progressive aging of the population and the retirement of the baby-boom generation will directly affect the pension system.
The study explains that assuming that new Social Security contributors entered the system with a contribution base equal to the current average base, in 2022 some 3,780,000 additional affiliates would have been needed to achieve zero deficit. “Taking into account that in December 2022 the number of unemployed-EPA was 3,024,000, the conclusion is that it would be necessary that in addition to all the unemployed becoming affiliates, it would be necessary to search among the working-age population, but inactive, about 750,000 additional people, which represents an extra 3.2% of the active population.”
That is, currently in order to achieve zero deficit, some 3.78 million more Social Security affiliates would be needed; and with the expected evolution in the country's demographics, in 2050 more than 6 million additional contributors would be necessary to achieve a financially sustainable pension system, that is, without a deficit.
The financing system for contributory pensions in Spain is pay-as-you-go, so one year's pensions are paid with the income of that same year. It is one of the "main drawbacks" noted in the report of both entities, which maintain that the system exposes pensions to "demographic tensions", that is, to significant increases in the number of pensioners without a parallel increase in the number of contributors. . “It works well if there is continuous feedback from members, assuming that the rest of the variables, especially the contribution bases, remain at the same levels.”
And although it recognizes that it is difficult to make predictions about the future, the INE's 2022-2072 population projections suggest that the weight of the group of active workers (between 16 and 64 years old, inclusive) will decrease, which will go from 64.9 % in 2022 to represent 56.5% of the total population in 2050.
On the contrary, the percentage of people over 64 years of age will experience significant growth, since it will go from 20.1% in 2022 to 30.4% of the population in 2050. Therefore, in this scenario, there will be a raising the demographic dependency rate, which will go from 31% in 2022 to 53.7% in 2050, with a slight decrease from that moment on. “If we compare the current figure with that of 1971, which was 15.9%, we see that it has almost doubled,” adds the study.
Among their conclusions, they warn that in 2050, 6.38 million additional members would be needed and, given that the estimated number of unemployed would be 1.58 million, 4.8 million more additional members would be needed, representing 21.33%. of the active population.
In 2070 the situation would improve slightly, although in the central scenario 5.77 million additional affiliates would still be needed. "The magnitude of these figures gives us an idea of the difficulty of achieving a zero deficit by increasing contributors," conclude both entities.
