The Minister of Inclusion, Social Security and Migrations, Jose Luis Escrivahas already managed to close a agreement with the European Commission and the government partners of Unidas Podemos on the last phase of the pension reform. The first meeting with the social agents, held this Friday, has left the unions one step away from joining the proposed formula, but the employers absolutely against that a good part of the effort to increase collection falls on the companies. And with little margin for his position to change substantially at the new meeting set for Monday.
The pending reform, which deals with the sustainability of the system, is linked to the future fourth disbursement of European funds (10,000 million euros) and has had to face the challenge of presenting a reasonable and credible scheme for the system to be at the same time fully sustainable and maintain purchasing power of pensions.
From the outset, the proposal should finance the pensions of the ‘baby boom’ generation, those born in the 1960s and 1970s, which meant a significant demographic jump. To make this extra cost sustainable, the proposal includes five mechanisms to increase collection by up to 15,000 million euros a year, which would mean increasing spending on pensions from the current 12% of GDP to 15.5% in 2050.
The first of them is him intergenerational equity mechanism (MEI), which has replaced the so-called sustainability factor approved by the Popular Party in 2013 and which has already been repealed. The MEI, which entered into force this year, would increase the overpricing from 0.6% paid by the company to 1% paid by the company and 0.2% paid by the worker, and extends its validity from 2032, as requested by Brussels, to 2050; the income that arrives through this channel is destined to nourish the Reserve Fund. Likewise, to obtain the necessary resources, it is proposed to reduce the percentage of income from higher rents that is free of contribution (instead of taxing them in their entirety, another proposal of maximums that was on the table), the contribution bases will be increased and a temporary solidarity surcharge on certain quotes. In another key element, the pension calculation periodthe initial proposal has come close to acceptable positions for the unions, optionally extending the years on which its amount is calculated from 25 to 29, but excluding the two worst for the pensioner from the calculation.
Our pension system is pay-as-you-go, that is, in theory, contributory pensions should be fully covered with the resources obtained from the contributions of employers and workers, while non-contributory pensions must be charged to the General State Budget. Therefore, active workers and employers have to understand that a good social security system requires sacrifices. Hence the importance of social dialogue to agree among all a equitable sharing of burdens, in line with the spirit of the Pact of Toledo. It will not be easy at all to reach an agreement between the Government, the European Commission and the social partners, but we would give a sign of maturity if we covered the short stretch that remains after the progress made in the last 48 hours.