Feel Capital | Until September, the government will have pay out over €39.4 billion euros in benefits to the more than 9.8 million pensioners in Spain, as well as to people claiming widowhood, permanent disability, orphanhood and family favour benefits. As a result, it will be forced to take extraordinary measures this summer after the emptying of the pensions’ piggy bank.
There has been a fall in the number of beneficiaries in June compared to April and May, the first time this has happened since the series began in 2005, and caused mainly by the increase in deaths due to COVID-19. But the expenditure will continue around the afore-mentioned amount and will far exceed the expected income from social security contributions.
The average monthly social security contribution by employees and self-employed people for pensions is around 600 euros. Despite the fact that in May there were 187,814 additional affiliates to the Social Security, the total number is almost one million below the 19,442,113 registered in the same month in 2019. So this means over 7 billion euros less collected in one year.
In the light of these figures, the government would have to use part of the European construction fund, close to 140 billion euros, to pay pensions. But it would risk exceeding the deficit limit and jeopardising the item earmarked for helping those sectors which support GDP. In this case, according to our calculations, almost 84.45% of that fund would be needed to guarantee the viability of the current benefits model in 2021.
It would be essential to resurrect the Toledo Pact ( the reform of the Spanish social security system approved in 1995) and modify the pension system in Spain once and for all. Europe is not going to allow the money earmarked for reconstruction to be used to pay these benefits.