Only the Balearic Islands could self-finance the pensions their citizens receive with the income generated by workers who live in the community, according to Fedea estimates. In the rest of the autonomies, the system is deficient and is maintained by the State’s contribution, although the differences are enormous by territory.
Where the gap (more expenses than income) is largest in absolute value is in Andalusia (close to 5.7 billion), Catalonia (4.9 billion) and Galicia and the Basque Country (with a gap of almost 4.1 billion in both cases). On the other hand, the communities that come closest to the balance that the Balearic Islands do achieve are Madrid and La Rioja, with less than 200 million each.
In the report, Fedea highlights that “the operation of Social Security under the single fund criterion has made it possible to mutualize the territorial differences in income, employment and aging of the population, thanks to the transfers made by the General Administration of the State.” And he adds that these contributions come from “the general taxes of the common regime territories and the issuance of public debt.”
The coverage rate measures how much of the pension expenses are covered by income. The Spanish average is 0.77, which means that income covers 77% of expenses. In Madrid the rate is 0.99 and in Catalonia, 0.82. Asturias, Galicia, Cantabria, the Basque Country, Castilla y León, Extremadura, Aragón and Andalusia (0.73) are below the national average. For the country as a whole, this balance was negative in 2021 worth 33,449.93 million euros (2.8% of GDP).
