The Foundation for Applied Economics Studies (Fedea) proposes a partial indexation of pensions with inflation, so that the highest pensions, but not the lowest ones that cannot be cut, are partially ‘sacrificed’ to the over the years with a loss of purchasing power that helps reduce pension spending and ensure the sustainability of the system.
This is one of the measures that the executive director of Fedea, Ángel De la Fuente, has defended during the inaugural conference of the National Congress of Economists and Auditors held this Thursday in Madrid, once it is known that inflation causes a revaluation of the pensions of the 2.8% in 2025.
For De la Fuente, this system that was recovered with the last pension reform “is going in the wrong direction”, since it brings the average pension dangerously close to the average salary and in the case of the new average pensions of the general regime they are even placed above the average salary. “When retirees earn more than active workers it is dangerous,” he warned.
However, the director of Fedea does not believe that the pension system “is going to go bankrupt”, but rather that there is a risk that a lot of money will end up being allocated from State accounts to address the gap that exists between contribution income. social benefits and the expenses of these benefits, causing a loss of future investments or neglecting other investments, such as education.
“Each employed worker has to contribute 2,500 euros to cover or close the Social Security gap and the like. It is a lot of money and it will be more in the future,” the expert has warned.
De la Fuente has stressed that the Spanish pension system is much more “generous” than those in the surrounding area, since retirement in Spain represents close to 80% of the salary of an active worker, while in countries like Germany it is 45%. %, although he has clarified that the fact that salaries in Spain are lower than in Germany plays an important role here, which also affects the amount of the pension.
Recover life expectancy
Along these same lines, another of the proposals raised by the Fedea expert consists of the indexation of the retirement age to life expectancy, an indicator that was part of the PP reform in 2013 and that was never used. “If we live longer and longer, we will have to work more,” he reflects.
Similarly, De la Fuente has advocated eliminating the option given by the current pension system of eliminating the worst months of working life to calculate the pension, with the aim of using the entire working life again, and recovering the idea of controlling the growth of pension spending, both for current and future pensioners, as well as moving towards a Swedish-type pension system or notional accounts.
More state resources
However, the expert has recognized that additional resources from the State will have to be allocated until the year 2050, coinciding with the years in which the ‘baby boom’ generation will enter the pension system, but he has asked that it be “equitable and as transparent as possible”.
Along these lines, he has proposed that the injection of this financing to pay for future pensions comes from a surcharge on the state personal income tax rate, which is the fairest tax in the Spanish tax system because “we all pay it.”
Fedea proposes a partial indexation of pensions to the CPI to ensure the sustainability of the system
The Foundation for Applied Economics Studies (Fedea) proposes a partial indexation of pensions with inflation, so that the highest pensions, but not the lowest ones
