Devalue pensions or make them sustainable?

The Spanish Government has presented its plan to change the update method pensions basically changing the CPI by a variable that will range from 0.25% to the CPI +0.25% depending on several variables. The issue is that this is clearly going to bring minimum revaluations in the coming years below the CPI. Is this a devaluation of pensions? It is being discussed here but I have my doubts. Obviously the goal is not to cut pensions because the problem is that pensions represent a very high state spending 100,000 million euros a year and now they have no income to pay them without creating a big problem without Social Security. The logic is that the amounts of pensions are directly related to what is quoted and this is now without any other variable. But you also have to have a relationship with government revenue every moment and that is what is now introduced with a minimum increase. If you had not noticed that minimum pensions would see cuts.



What more factors will be taken into account in the future? Life expectancy. A year and amounts equal traded future pensions will be lower due to increased life expectancy. It is intended that the total amount paid by the State to a pensioner is on average the same regardless of the years lived.

It is true that all this leads to a site under future pension. But it is also true that without reforms the future would be worse. A state unable to pay pensions. Reform is necessary and perhaps improved. He might have added taxes to fund pensions or remove caps as proposed by Thomas Gomez quote PSOE in Madrid. All options have their pros and cons but of course to do it this reform must be sustainable.

468 ad

Leave a Reply