Escrivá proposes to increase social contributions for a decade to fill pension piggy bank

Social agents awaited this Tuesday that Minister José Luis Escrivá would present a scan adjustment mechanism that guarantees the sustainability of the system fo

Escrivá proposes to increase social contributions for a decade to fill pension piggy bank

Social agents awaited this Tuesday that Minister José Luis Escrivá would present a scan adjustment mechanism that guarantees the sustainability of the system for new generations and found a financial project that will raise workers' contributions at 0.5 percentage points from The year that comes to fill in the reserve fund, the so-called pension piggy bank.

The reserve fund has been emptying in the last decade until it has only 2,000 million euros, an insufficient amount to face a monthly pay of the system. Escrivá has proposed a "finalist quotation" that will remain in force until 2032 with which it will be provided again. The Social Security Reserve Fund closed 2020 located at 2,138 million euros, according to the last annual report on the mechanism referred to Congress. In 2011, the Fund came to reach an amount of 66,815 million euros.

"The new mechanism is configured as a contingent and temporary tool that will act on the set of parameters, the system preserving the balance between generations and strengthening its long-term sustainability," says the document delivered today by social security to the appointment Negotiate the reform of pensions. The proposal will be negotiated in the next ten days with companies and unions. Regardless of whether it is supported or not, the Government will work as of November 15 to introduce it as an amendment in the reform that is already in process.

In this way, quotes charge a great weight in government strategy to rebalance social security accounts and guarantee pensions of the future. Several of those changes are already underway. In 2022 companies should face the budgeted increase in quotes (1.7%) more to prepare for this 0.5% finalist to finance pension piggy bank. In addition, among the last amendments sent by the parties present in the Toledo pact, the unrest of the social contributions requested as bounds can be the government as a way of financing the system.

The government promises to limit the use of these funds to the maximum. "The use of this finalist quota and the yields that generate will be used exclusively to address the deviations of the expenditure level." Throughout this decade, accumulated funds will serve as a mechanism to finance spending deviations precisely as intergenerational equity. In the proposal of it, Escrivá offers to make triennial revisions of the system to adjust the quotation effort based on the forecasts. If the expected expense is lower than that it will finance the new finalist quotation, the contribution may be downloaded after negotiation with social agents. If it is superior, you can resort to pensions piggy bank for the payment of contributory benefits with an annual disposition limit of 0.2% of GDP. In the event that the spending of spending is greater than that 0.2%, the Government will be authorized to study measures that "minore pension spending", within the recommendations of the Toledo Covenant.

Despite the relevance and details of the proposal submitted by Escrivá, since the unions they have underlined this afternoon that the meeting has ended "without novelty" and that no closed proposal on the intergenerational equity mechanism has been given.

In any case, the proposal presented by Escrivá will have a development rather than likely over the next few days that could extend the effort now for contributions. The minister had already warned that his proposal would be of a "contingent" nature, which fits with the presentation he has done today to social agents. But the pact reached last summer with social agents points out that, in exchange for repealing the sustainability factor driven by the PP in 2013 as a measure of expenditure containment, another mechanism should be approved and that would enter into force from 2027. The increase in contributions proposed by Escrivá would enter into force in 2023 and may not be sufficient to cover this guarantee offered by the sustainability factor and that the European Commission requires as a condition to transfer recovery funds.

Until within two weeks, therefore, the final nature that takes the first part of the reform of the pensions that the Government has undertaken. Nor, as it happens with labor reform, the two parts of the coalition government row in the same direction or go to the crash. If controlling pension spending is a fundamental commitment acquired by Nadia Calviño at the forefront of economic affairs, for the former member of the Toledo Covenant Commission and Minister of Labor Yolanda Diaz is also. And it showed it in February 2019 when the party of it impossible for an agreement in Congress for the reform that is negotiated today.

Updated Date: 02 November 2021, 18:02

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