RETA gateway: the pension hole Spain saw coming

RETA gateway: when paying less buys the same rights

Lawyers, doctors and engineers who contributed at half the rate for decades through alternative mutual societies now want to switch to the RETA (Spain's self-employed social security scheme) on identical terms to self-employed workers who paid the maximum rate. The paradox is so blatant that the Government, far from stopping it, seems ready to approve it. The official story is that a historical debt is being regularised; the alternative reading is that votes are being bought at the cost of wrecking what is left of the contributory system.

The numbers speak for themselves. A RETA self-employed worker paying the maximum contribution has paid far more into the social security system — through contributions — than a member of the lawyers' mutual society, whose dues could be up to 50% lower. Now, under the gateway, both would access the same public pension. The question is obvious: who foots the bill? Answer: those who played by the rules.

A system that rewards those who contribute least

The initial proposal of a one-to-one conversion for those over 52 and 0.77 for those under has reportedly morphed, according to the latest leaks, into a capitalisation system. In other words, the money accumulated in the mutual society — without inflation adjustment — is divided by the years contributed to the RETA. The result: meagre contribution years, plus the possibility of the State offering to "buy" additional years. That is, paying in advance for what was never contributed. A tidy business for the Tax Agency: immediate income, deferred spending.

Some argue this is no longer a gateway but a revolving door towards the Austrian backpack model (individual pension accounts). If the system shifts towards individual capitalisation, as European plans and the PP's programme suggest, today's debate is just the appetiser. The future pension, they warn, will be whatever you put in.

The self-employed's plight: we pay twice

Meanwhile, the average self-employed worker, who has spent years suffocating under contributions that bear no relation to their real income, watches those with higher salaries and lower contribution effort board the same carriage. The feeling of having been the sucker runs deep in the community. Some demand that, if there is a gateway, it should come with a refund of overpaid contributions. Others have already written the system off and advocate a model like the Dutch one: a universal minimum pension and everyone fends for themselves.

The final irony: the pay-as-you-go system is on its deathbed, and instead of injecting resources into it, a manoeuvre is being allowed that reduces the social security deficit in the short term — more contributors — but mortgages it in the long term, when these new retirees with barely any real contributions claim their pension. And then? Then, someone else's problem.