The sharp increase in social contributions imposed by the pension reform recently approved by the Government has only just begun. This is at least what the Foundation for Applied Economic Studies (Fedea) warns in its latest report published this Wednesday on the effects that this rule designed by Minister José Luis Escrivá will finally have on the system.
His estimates differ greatly from those provided by Escrivá and, according to his calculations, the measures he implements, which includes the revaluation of pensions with the CPI, will trigger spending by 4.4 points of GDP on average during the period. 2020-2050 – and will even reach 6.3 points of extra spending at the end of the period – until reaching 17.8% of GDP in 2050, almost three points above the 15% maximum that they have set as a barrier.
With this strong rebound, Spain would lead Europe in pension spending, exceeding the EU average by 5.2 points and being 1.6 points ahead of Italy.
This excess spending on pensions will lead to an increase in social contributions between 3 and 4 percentage points in five years as a consequence of the activation of the safeguard clause of the Intergenerational Equity Mechanism (MEI), which would have to come into operation only two years later. of the approval of a reform “supposedly designed to guarantee the sustainability of the system,” according to Fedea.
But even this adjustment will not be enough, since it would leave the public pension system with a basic deficit that, in the absence of corrective measures, would be 4.4 points of GDP on average during 2022-50 and would reach 6.3 points. at the end of the period, “absorbing 52% of the State’s net tax revenues,” according to Fedea. “These results call into question the logic of a reform that would require important corrections from the moment of its approval,” the report concludes.
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