Crisis in Social Security

The ratio of affiliates per pensioner falls to minimums of the last 20 years

Spain is aging rapidly and the creation of employment in recent years has not managed to reverse the Social Security crisis , but the ratio of affiliates that support a pensioner has fallen in January to only 2.09, the same level that it reached in 1997, 20 years ago.

Aging , however, is not uniform and in Ourense, Lugo and León there are already as many pensioners as Social Security affiliates. According to the data of the Ministry of Employment , the Social Security balance is especially deficient in the interior and Cantabrian Spain, with entire communities where the ratio is below 1.5 occupied by each pensioner: Asturias (1.18), Galicia (1.28) and Castilla-León (1.46). And in no community, not even in Madrid, the community with the best ratio, with 2.68, the state average before the crisis is reached.

The number of pensions has grown more than 1% per year in recent years

Currently the Social Security has 8.7 million pensioners, who receive 9.57 million benefits: 900,000 people receive more than one benefit for having contributed in different schemes or, for the most part, for the simultaneous payment of a widow’s pension with your own retirement benefit.

The number of pensions has grown more than 1% per year in recent years, even in the six years of crisis, between 2008 and 2013, when the economy was destroying employment and losing contributors, while the average payroll has continued to grow, at an annual rate of 3%, even in the last six years when pensions have only risen by 0.25%, due to the higher pensions that new pensioners have, which are much higher than those received by those who die.

The income of the Social Security suffer the consequences of the policies of promotion of employment

“The public pension system was not designed for a situation like the one we live in, with high rates of unemployment, over 20% for years, or for a life expectancy of 85 years like that of our retirees” explains Josep González Calvet , researcher at the Center for Research in the Benestar Economy (CREB), of the University of Barcelona. In the Spanish case, in addition, Social Security income has been eroded by the growth in the number of unemployed who no longer receive any benefit: while the workers who contribute have increased, a good part of the long-term unemployed, who still add up to 1.6 million people, they have stopped being able to contribute to the pension system.

Social Security income also suffers the consequences of employment promotion policies, often made by lowering or reducing social contributions. and, in addition, recalls González Calvet, the system was not designed to face a salary drop like the one that caused the crisis. “Average salaries are lower now than they were a decade ago, and that collapses the system,” he adds.

Since 2012, contributions no longer pay pensions and, once the Reserve Fund is exhausted, they are paid with government loans. To cover the short-term deficit, the government and the political parties study measures such as creating a specific tax to pay Social Security; dedicate a heading of existing taxes, or pay with taxes and not with contributions the widow’s and orphans’ pension, which are equivalent to 19% of the payroll of the system.

Also for the short term, Comisiones Obreras, proposes measures such as the dismantling of the maximum contribution bases; the increase in the minimum contribution base; the assumption by the State of administrative expenses; the temporary increase in the contribution rates and the equalization of the contribution bases of the General Regime and the Autonomous Regime.

González Calvet considers, however, that “beyond putting short-term patches, what we do know is that a public pension system can decide what percentage of national income goes to pensions, so that amount will grow if the economy grows. This is a political decision that we will have to make among all, “he said. Thus, he explained, the ratio between contributors and pensioners will no longer be relevant and he gave as an example the effect of automation. “We are going to a world with fewer workers and more machines, and therefore what will be relevant will be the taxes paid by their owners.” In the short term, however, it seems that the only safe way to maintain the standard of living after retirement will be the previous savings: according to a survey by the Mapfre Foundation, 82% of citizens fear that their future pension will be insufficient and even 20% say they have already started saving.