The reform of the Escrivá pensions has a price. Yesterday the European Commission put some figures, and they do not match those that, at the time, were set by the previous head of the Ministry of Inclusion and Social Security. The figures managed by Brussels indicate that, in the period 2022-2050, the average expenditure on pensions will be 15.1% of GDP, and with this percentage an adjustment equivalent to 0.8% would be required, that is to say, about 11,700 million euros.
The European Commission calculates that the set of measures adopted will mean an increase in pension system expenditure of up to 3.3 percentage points of GDP compared to the scenario before the reforms, and that, in 2070, the increase will be 5 points In addition, it indicates that the average monthly expenditure will rise to this 15.1% of GDP during the period 2022-2050. If a wider period is foreseen, from 2022 to 2070, expenditure on pensions would rise by an average of 15.6%.
The main element that causes this increase is the new indexation rules, which assume that pensions increase in line with inflation, so that pensioners do not lose purchasing power, but in exchange for a high bill . It is followed by the abolition of the stability factor that was established during the Rajoy government and which involved a resounding brake on spending.
These are two elements that were known to drastically increase spending, and to compensate for this, systems were established to increase income, such as increased contributions to the system and incentives to extend the effective age of transition to the retirement However, Brussels technicians consider that this compensation is more limited than what the Spanish Government had calculated. Their calculation is that the revaluation with the CPI and the elimination of the sustainability factor are charged more than four points of the GDP, while the incentives to delay the effective retirement age only make up for it by one point.
These are data collected in the report on the impact of aging (Aging report) published yesterday by the European Commission. The report establishes a comparison between expenditure on pensions in the previous scenario and the current one, once the reforms have been applied. In the current scenario, pension spending would reach its highest level in 2050 (17.3% of GDP), and from this peak it would decrease, but only slightly, to 16 .7% in 2070.
What are the consequences of this increase in spending higher than planned by the Spanish Government? What is at stake is the activation of the automatic closing mechanism, included in the reform as an essential condition to obtain the endorsement of Brussels, and which foresees acting on the basis of certain limits.
The commitment is that spending cannot exceed 13.3% of GDP on average. According to the figures of the European Commission, the expenditure on pensions would be 15.1%, a percentage to which the estimate of income that Airef will make, of 1%, would be subtracted, according to its latest calculations. In this way, the expenditure would be 0.8% higher than the limit and would lead to this adjustment of 11,700 million euros. A correction that should be carried out by means of a plan negotiated with social agents or from a certain time period, with an increase in social contributions.
It is a forecast, not a certainty, because everything is still pending the final report of Airef which, in 2025, will update the revenue forecast. This is where, from the Ministry of Inclusion and Social Security, they point out that this forecast can be higher in view of the good functioning of the labor market. In its initial calculations, the ministry indicated that the average expenditure on pensions until 2050, corrected for new incomes, would be 12.4% of GDP. Therefore, this percentage would be below the reference to assess the sustainability of the system, and the closure clause would not need to be applied.