The Spanish pension system has been in deficit for some time. Thus, this year, the payment of pensions will require a fund transfer of €50 billion that the Government must provide by diverting funds from other budget items. This amount—€50 billion annually—is exactly equivalent to what the Spanish State obtains by borrowing in the markets to finance the public deficit: €50 billion, or 3% of GDP. The OECD warns that…
Cristina Herrero, President of the Independent Authority for Fiscal Responsibility (AIReF), yesterday criticized the Government for filling the ‘pensions piggy bank’—known as the Reserve Fund—based on taxes and debt, that is, with transfers and loans from the State. The latest loan, for €10 billion, was made this very month of November to cover the extraordinary annual payment. Total pension spending stands at €15.6 billion per month (around 218 billion annually),…
A significant shift – highlighted by several Spanish media outlets – in the view that the Bank of Spain has held until now regarding the scale of the challenges facing the Spanish economy. In the first report with former minister José Luis Escrivá as governor of the Bank, the entity’s constant concerns about the sustainability of the pension system have disappeared. As the newspaper El Mundo explains, “After the warning…
MADRID | The reform of the pension system in Spain is planned to help to improve the outlook for sustainability of the system by reducing pension expenditure as a share of GDP. It should weigh in towards reducing the public deficit, too. At BBVA, analysts have drawn some basic comparisons between the Spanish and the German pension systems. “Given uncertainties about employment, productivity and demographics, it is appropriate for the…
Is Eurofound’s a contrarian view? While youth unemployment rampantly increases throughout the European Monetary Union, Eurofound on Wednesday will be telling a different story: the labour market shortfall caused by the decline in Europe’s population and workforce will not be offset by growing immigration levels nor by higher fertility and productivity rates, delegates will be told at the Opening Conference of the 2012 European Year of Active Ageing and Solidarity…