Pensions: the cost of rejecting early-retirement cuts is just the tip of the iceberg
Refusing to scrap reduction coefficients for workers with over 40 years of contributions would cost 3,358 million euros. Spain is the European country with the most unfunded pension liabilities.
English · Original discussion in Spanish · Published
Pensions: rejection of early-retirement cuts exposes how fragile the system is
On Thursday 11 June, Spain's PSOE and PP voted against scrapping the reduction coefficients that apply to workers with more than 40 years of contributions who retire before 65. The cost of the measure: 3,358 million euros, barely 1.56% of current pension spending (215,900 million). It is not much, but rejecting it maps out the system's roadmap: there is no room for improvements, not even for a minor correction.
The sustainability debate
Those who defend the current system admit the situation is delicate, but rule out an imminent collapse. They point to a pogre impoverishment: pensions increasingly lower in real terms, especially for those born in the 1980s, which would barely cover basic expenses. The two-year increase in the retirement age already meant an effective 10% cut in the pension of those who do not live long enough to collect it.
Europe's unfunded pension hole
Spain is the European country with the most trillions of euros committed to pensions that are not funded. Some analyses put the breaking point before 2030, although others predict a slower deterioration. The reference by writer De Prada to an "undignified future" for the country resonates with those who see an orchestrated drift towards dismantling the welfare state.
The decision not to scrap the reduction coefficients is just one symptom. If the door is closed to a minimal improvement of 3,358 million, what can be expected when pension spending exceeds 15% of GDP? The system's days are numbered or, at the very least, it faces a badly degraded old age.
Related discussions in the forum
On Thursday 11 June, Spain's PSOE and PP voted against scrapping the reduction coefficients that apply to workers with more than 40 years of contributions who retire before 65. The cost of the measure: 3,358 million euros, barely 1.56% of current pension spending (215,900 million). It is not much, but rejecting it maps out the system's roadmap: there is no room for improvements, not even for a minor correction.
The sustainability debate
Those who defend the current system admit the situation is delicate, but rule out an imminent collapse. They point to a pogre impoverishment: pensions increasingly lower in real terms, especially for those born in the 1980s, which would barely cover basic expenses. The two-year increase in the retirement age already meant an effective 10% cut in the pension of those who do not live long enough to collect it.
Europe's unfunded pension hole
Spain is the European country with the most trillions of euros committed to pensions that are not funded. Some analyses put the breaking point before 2030, although others predict a slower deterioration. The reference by writer De Prada to an "undignified future" for the country resonates with those who see an orchestrated drift towards dismantling the welfare state.
The decision not to scrap the reduction coefficients is just one symptom. If the door is closed to a minimal improvement of 3,358 million, what can be expected when pension spending exceeds 15% of GDP? The system's days are numbered or, at the very least, it faces a badly degraded old age.
Related discussions in the forum
- PENSIONS: Funcas warns that immigration does not solve Spain's ageing problem (and may make it worse) · 80 replies
- Lump sum for delaying retirement · 89 replies
- 40 years of contributions. Ione says the PP-PSOE has just screwed 900,000 retirees with 40 years of contributions out of the full pension · 12 replies
- Global Ponzi · 105 replies
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (18 replies).
More summaries
-
Global Financial System Operates Like a Classic Ponzi Scheme
Analysis argues the global financial system is a Ponzi scheme, citing unpayable debt, bank collapses, and collective blindness until the inevitable crash.
-
Spain's Pension System: Ponzi Scheme or Demographic Crisis?
With an average pension of €1,260 and a 30% contribution rate, Spain's pay-as-you-go system faces a demographic crisis. Is it a pyramid scheme?
-
Putin and Lukashenko put nuclear forces on alert
Putin and Lukashenko activate their nuclear forces amid a scenario of military escalation. A critical analysis of the real impact and the debate in the forum.
-
Ebola in Europe: two possible cases under investigation in Italy
Italy activates Ebola surveillance after hospitalising two aid workers. A real threat or another distraction manoeuvre? A sceptical analysis at Burbuja.
-
Latina with achondroplasia demands a Spaniard PAY for her date (video)
We analyse the forum debate over the controversial demand for a free meal on a televised date and what it reveals about modern relationships in Spain.
-
Welcome back home, Mr. pilinguin: the EU explores a thaw with Moscow
The EU is exploring an approach to Moscow amid the economic crisis. We look at the debate on Burbuja about the diplomatic shift and the reality of sanctions.