The Government returns to save pensions with taxes: Transfer 18,000 million to Social Security

The expenditure ceiling of the general budgets of the State (PGE) of 2022 will include a transfer of more than 18,000 million to social security to guarantee th

The Government returns to save pensions with taxes: Transfer 18,000 million to Social Security

The expenditure ceiling of the general budgets of the State (PGE) of 2022 will include a transfer of more than 18,000 million to social security to guarantee the payment of benefits. To save the pensions, ultimately. It will be done as a fertilizer of the so-called improper expenses, a measure approved by the Pact of Toledo but that Minister José Luis Escrivá raised from the very moment in which he arrived in office.

Within these improper expenses include some employment incentive policies, but also the operating expenses of the ministry itself or certain non-contributory benefits. And the figure, which already grows more than 30% compared to what this year was euphematically referred to as "balancer" transfer, will continue to increase since the objective at the closing of legislature is that it ascends 22,000 million euros.

"Throughout the legislature, the commitment to assume the corresponding part of improper expenses will be fulfilled to release the system from other commitments that are not strictly the sustainability of the pension system," the Minister of Finance, María Jesús Jesús Montero, said yesterday. At the press conference after the Council of Ministers in which the expenditure ceiling was approved. "Sometimes the mixture of this type of expenses can give the false impression that the system will not be sustainable in the future" but pensions are "fully guaranteed", emphasized the government until recently.

However, among experts there are many doubts that this transfer is the correct decision. First, because it is not clear that those expenses called improper are not, actually, own. Maybe not all, but a lot of it. Second, because pensions are paid with taxes, which diffuses the contributory nature of the system. And third, because it does not suppose it is for a solution to the hole of the system but to transfer it from social security to budgets. Of quotes, taxes.

On the latter respect, Escrivá already said when he was at the forefront of the Independent Fiscal Responsibility Authority (AIRF) that it is important to transmit certainty about the situation of the system. And that budgets have many more resources to deal with the needs that may be presented. In addition, he considers that these expenses are totally alien to the contributory system and that what has been done is "overloading social security with all kinds of measures to be financed with social contributions." So he already said in February 2020, shortly after being appointed Minister of Social Security.

The announcement of the transfer after this limit of non-financial expenditure, which is the first step in budgets next year, occurred the same day in which the payroll of pensions was known. As it is Norma - Salvo in the toughest months of the pandemic - the monthly invoice marked a new historical maximum with 10,202 million euros, which represents an increase of something more than 3%.

The average pension of the system is at 1,033 euros, while the retirement, which is the most numerous, amounts to 1,189 euros. However, the benefits of the new retirees of the general regime that access the system is already at 1,451 euros.

Updated Date: 27 July 2021, 20:32

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