The European Commission’s recent report on aging predicts that Spain will need to allocate a larger percentage of its GDP to public pensions in the near future. This is largely due to measures introduced by former minister Jose Luis Escriv, which include annual pension revaluations based on inflation.
While these measures were intended to maintain the purchasing power of pensioners and prevent future losses, they are expected to result in a significant increase in spending on pensions. The increase in public spending is forecasted to peak in 2051.
To address this issue, other initiatives have been implemented, such as increases in contributions and changes in pension calculations, with the goal of generating more income for the system. However, despite these efforts, the system is still projected to face a budget deficit, which will worsen over time.
In response, the reform includes provisions for automatic adjustments based on evaluations by the Independent Authority for Fiscal Responsibility (AIReF). This move aims to ensure long-term sustainability of the pension system by balancing income and expenses.
Overall, while the reform seeks to maintain long-term sustainability of the pension system, additional adjustments may be necessary in the future if there are any discrepancies between income and expenses. AIReF will play a crucial role in monitoring these changes and providing recommendations to the government if further adjustments are needed.
