• 1,500 million.The Government will keep the piggy bank of pensions to a minimum to pay the extra Christmas
  • Economic plans: The Government of Sánchez & Iglesias: race to raise taxes, labor counter-reform and impossible pensions

Pedro Sánchez has repeated it on numerous occasions, and his Executive partner, Pablo Iglesias, has also defended it on no fewer occasions, so if the PSOE and Podemos Executive moves forward it seems certain that pensions will be linked to the IPC. And that will mean a very high cost for Social Security that, in addition, will accumulate year after year and that will yield a total figure during the next term of at least 18,000 million euros .

The data, calculated by Robert Meneu and Enrique Devesa, two of the greatest Social Security experts in Spain and members of the prestigious team of the University of Valencia, also starts with a very moderate IPC forecast . Specifically, the figure is obtained by estimating that the average inflation over the next four years will be 1.25% and that pensions, therefore, will revalue that same amount.

The inflation forecast of the Bank of Spain for 2020 is 1.1%, while by 2021 the data is 1.5%, figures that are in line with the simulation performed. However, it is far from discardable that the CPI rebounds in the following years of the eventual legislature. Moreover, the European Central Bank (ECB) has among one of its priority objectives to raise inflation to levels close to 2%, and if the unlikely objective of approaching that level was fulfilled by 2020 the total expenditure would skyrocket to figures even close to 30,000 million .

In any case, what the calculations confirm, once again, is that linking pensions to inflation implies a strong increase in the disbursement that the system must make with respect to the 0.25% rise that, in case of deficit, follows marking the current law. To address it, in addition, Social Security no longer has the Reserve Fund since, as confirmed by the Minister of Labor, Magdalena Valerio, the Executive will once again resort to the piggy bank of pensions to pay the extra Christmas pay. The Government did not want to specify the figure that it will withdraw and spoke of a maximum of up to 3,598 million, but the amount that will remain in the Fund will not be much higher than 1,500 million .

Therefore, if necessary, the search for new ways of financing, beyond those offered by the contributions, as well as reducing the expenses that depend on Social Security. The PSOE and Podemos programs - and most political forces - collect numerous references to pension rises, speak of "justice" and "decent" benefits, but instead hardly provide financial solutions . And those that contribute, such as the improvement of the labor market that will result in an increase in the income of the system, seem insufficient as well as unrealistic given the slowdown in the labor market.

Equally vital will be the negotiations within the Toledo Pact, although this commission was already seriously injured after the rupture of Podemos before the April elections, and now it will have to face an even more divided Parliament with forces as disparate as Bildu, PP, ERC or Vox. The agreements, therefore, will be as difficult as the Social Security situation is complicated.

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  • Social Security
  • We can
  • PSOE
  • Pedro Sanchez
  • Pablo Iglesias
  • Magdalena Valerio
  • Pensions

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