The OECD AWARE AGREE Pressure in the financial sustainability of pensions in Spain

The Organization for Economic Cooperation and Development (OECD) has alerted the impact that the aging of the population on the "financial sustainability" of

The OECD AWARE AGREE Pressure in the financial sustainability of pensions in Spain

The Organization for Economic Cooperation and Development (OECD) has alerted the impact that the aging of the population on the "financial sustainability" of the Spanish pension system will apply, as follows from the Annex for Spain of the Biennial Report 'pensions at a glance ', published on Wednesday.

The document explains that the income of those over 65 equals around 96% of the average income of the total population, which represents eight percentage points rather than in the OECD set. In addition, in Spain this ratio has grown by 11 points compared to the year 2000, which means that the income of the elderly has grown to a greater ratio than those of others.

The OECD considers that this increase should be largely due to the pension spending on retirement has grown at a much higher rate than the average salary. In this sense, although demographic changes have registered a decline with respect to the rest of OECD countries, aging "will now accelerate at a very rapid rate, putting a strong pressure on financial sustainability," the agency has alerted.

In its compared analysis, the institution based in Paris considers that the conditions for achieving a full retirement board are "laxas" if they are compared internationally. While in 2027, a worker can be withdrawn at 65 with a full board if he has quoted 38.5 years, in France, 43 years are needed, while in Germany 45 years are needed.

In addition, the OECD has put the accent on which in most countries the total work career is taken into account to calculate the pension. In the EU, only France, Slovenia and Spain use a temporary horizon of 25 years or younger.

The 'Think Tank' of developed countries has also revealed that the repeal of the sustainability factor has caused that the pension replacement rate has grown up to 89%, compared to the average of 62% of the OECD.

"This high rate of substitution will be eligible at 65, while the same level required to work up to 69 in the Netherlands, Italy would be 82% at 71 and Denmark, 84% at 74 years," HA Featured the OECD.

The Agency has also exemplified that the repeal of the pension revaluation index and the sustainability factor and its substitution due to the IPC indexing and by the intergenerational equity mechanism, respectively, "illustrate that a policy consisting of time requires extensive Political consensus before its implementation ".

In the full report, the OECD has alerted this Wednesday, at a general level and without specifying any country, that the future of pension systems depends on the adoption of the decision to raise the contributions, expand the retirement age or reduce the pensions

Date Of Update: 08 December 2021, 07:12

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