The OECD is not satisfied with the new pension system in Spain and it aligns with Airef's calculations regarding cost overruns. The body highlights in the biannual report on pensions in several countries published yesterday that "the additional income only partially covers the growing expenses" derived from the reform of the model, so that it expects the deficit to grow by the equivalent of 1, 1% of GDP in 2050. This situation is basically to blame for the reintroduction of indexation of pensions to inflation. Next year, for example, pensions will rise by 3.8%.
The Organization for Economic Cooperation and Development (OECD) does not evaluate the suitability of the system designed by the Government of Pedro Sánchez in the previous legislature, but lists the corresponding data for each country. In his report on public pensions, he details that the increase in income expected with the reform will be equivalent to 1.3% of GDP (all that is produced in a year) while expenses will increase by 2.4% of GDP For this reason, a lag or deficit of the aforementioned 1.1% of the gross domestic product is expected.
Sources from the Ministry of Social Security, headed by Elma Saiz, responded yesterday to the publication of the report that the pension reform "has the endorsement of Europe" and highlighted the new "mechanism of intergenerational equity, the "increase in the maximum bases or measures to align the effective age with the legal age". In addition, they recalled that "income from social contributions is growing at a very high rate, of 10%, thanks to the improvement in employment".
Spending on pensions in Spain, which currently accounts for 12.3% of GDP, is already above the European Union average (8.5%). Although there are some European countries with a higher bill, such as Italy, with 15.4%, or France (14.8%). Germany is below, with 10.3%. The projections of the European Commission anticipate that this expenditure in Spain will increase to 13.2% in 2045, although these future estimates do not take into account all the approved reforms, the report details.
The high bill takes place in an environment in which Spain is the second country where the pension covers a higher percentage of the previous gross salary. Employees who start contributing at the age of 22 and complete the entire period will receive a pension equivalent to 80.4% of their salary. The OECD average is 50.7%. Only Greece exceeds Spain in this regard, with 80.8%. On the other hand, in the more developed countries of Europe, the percentage is significantly lower: in France it stands at 57.6% and in Germany, at 43.9%.
During the presentation of the report in Paris, the Secretary General of the OECD, Mathias Cormann, bet on increasing employment, because delaying the retirement age is not enough, reports Efe. Spain is one of the states where the percentage of the employed population with respect to the total is lower; 57.7%. On the other hand, in Germany it is 73.3%.
The main challenge facing pension systems is the aging of the population. According to current projections, the weight of the population over 65 years of age in the OECD states as a whole will go from 18% in 2022 to 27% in the horizon of 2050. The reforms that are they carry out try, to a large extent, to delay the age at which people retire.
The average normal age at which a person can retire with a full contribution period if they started working at age 22 is 64.4, rising to 66.4 for those starting their working career now. In Spain, the theoretical retirement age has been set at 67 in the coming years, although the actual age at which workers become pensioners is much lower: 62 years for men and 61.8 years for the women. These are data from 2022. This is why Social Security encourages citizens to postpone retirement in exchange for financial incentives.
A recent report by the consulting firm KPMG based on a survey reveals that eight out of ten Spanish companies consider that the reform of public pensions represents a higher cost for their accounts. And only 28% have at least one private retirement provision plan for their workers, alternative and complementary to the public plan.
