Fedea reduces the savings that delayed retirement will contribute to pensions

A new report from the Fundación de Estudios de Economía Aplicada (Fedea) lowers the savings that incentives for delayed retirement and the new contribution system for self-employed workers will entail in the pension reform. These are two important elements of the reform because part of Minister José Luis Escrivá’s argumentation to prove that the system will be sustainable is based on them.

Fedea acknowledges that these two initiatives will mean savings for the system, but specifies that it will not be as much as Minister Escrivá foresees and that it will only be in the short term. “It supposes an appreciable relief for the accounts of the public pension system in the short and medium term, but not in the long term,” says the report. prepared by the deputy director of Fedea, Ángel de la Fuente. It will come to have a positive net impact of just over one point of GDP in 2032 and 2033, to gradually reduce from then on. In the 2022-50 period, savings would be half a point of GDP, and from 2050, the effect of the changes would be negative and would penalize the accounts.

In any case, as the same report acknowledges, it is precisely in this period, until 2050, when greater demographic pressure is expected on the pension system. “Its effect would go in the right direction,” says Fedea, but adding that “the improvement would only be temporary and would tend to be reversed in the long term”

What Fedea questions is, on the one hand, that the success of the reform may be less than planned and, on the other, whether its effect will be sufficient to prevent the pension deficit from skyrocketing.

To carry out his calculations, Fedea starts from less optimistic hypotheses than those of the Ministry. For Fedea, the incidence of early retirement would reach 100% within 10 years with an average delay of one year, while the ministry forecasts 60% with an average delay of three years. And with respect to equating the self-employed with the general system, he anticipates resistance from the collective “to what would mean a sharp rise in their contributions.”