Pension accounts do not come out: experts ask parties not to launch "unsustainable commitments"

Revaluation with the CPI? Armor? Repeal of the 2013 reform? Pension commitments can withstand an electoral campaign but not the projection of income and expenses of the system with a demographic reality like the Spanish one.

"The parties know they are making unsustainable commitments but politicians never take unpopular initiatives in the short term." This summarizes his diagnosis of the future of the Spanish pension system at the Institute of Spanish Actuaries, which has prepared a complete report on the sustainability and sufficiency of the benefits paid by Social Security and must pay to future generations.

Actuaries are responsible for applying mathematical models for risk assessment in the financial industry and their signature is a requirement to support formal projections of a reality based on data and statistics. The report they present is backed by the leading pension experts. It is headed by Enrique Devesa , professor at the University of Valencia, and is signed by Mercedes Ayuso , from the University of Barcelona; Iñaki de la Peña , from the Basque Country; Rafael Doménech , from the University of Valencia and responsible for BBVA Research; Miguel Ángel García , from the Rey Juan Carlos University; Gregorio Gil de Rozas , Javier Olaechea and Luis Sáez de Jáuregui , of the Institute of Spanish Actuaries; José Antonio Herce , from International Financial Analysts and Miguel Ángel Vázquez , from Unespa, the employer's insurance company.

The report arrives unanimously among the parties when it comes to revaluing benefits with the IPC for the electoral campaign. And basically they conclude that the Spanish system is "a black box" that only administrations access and that they manage at their discretion, in the opinion of Gregorio Gil de Rozas, president of the institute.

The revaluation with the CPI is, in the opinion of actuaries, an example. "It can be a huge tax deficit for at least 35 or 40 years unless major measures are taken," they warn. In the worst case scenario, taking this measure would lead to the fact that by 2050 the Social Security deficit would already represent almost 10% of GDP . Today, the deviation does not reach 2%, five times less.

«The situation of the system is incompatible with guaranteeing purchasing power in isolation; they have to present themselves with other measures that significantly reinforce the system, ”they explain.

In the campaign that is about to begin, the PSOE announced publicly yesterday its commitment to the UGT and CCOO unions to revalue with the CPI the pensions already in December or, if it is not possible, do it later with retroactive effects to January 1 . The promise includes repealing the 2013 reform that established a 0.25% revaluation mechanism while Social Security presented a deficit, which is what has triggered the pensioners' revolt since 2018.

In the current situation, experts indicate that the system is "generous" in terms of adequacy or sufficiency of benefits. But they warn that the reforms of 2011 and 2013 could reduce these indicators. Specifically, they point to that of 2011. This reform established that, each year, the computation period for the calculation of the pension is increased by one year. Thus, in 2023 pensions will be calculated taking the last 25 years of the worker's working life, compared to the previous 15 years. "At the present time it may seem that it will have no effect on generosity, but it will." says Devesa.

However, the Institute of Actuaries emphasizes that although the pension system lacks an actuarial basis with the establishment of mechanisms that regulate arbitrary measures, the solution must be political.

In its program, the PSOE adds that it will promote reforms to make the system sustainable and sufficient. The same as the PP, which proposes that the revaluation formula include other factors besides the CPI. Citizens defends decent benefits; United We may, that its purchasing power be shielded forever in the Constitution. Vox, to evolve towards a private public system. All of them, together with PNV, ERC, CC ... will debate the reforms in the Toledo Pact from next year.

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