The public pension system is a fundamental pillar of our welfare state. Pensions are a right that has dignified the lives of millions of citizens. In addition, they constitute the greatest factor in reducing inequality, which in our country is even greater than in most countries of the European Union. Pensions are important for those who receive them, who in many cases redistribute them among children and grandchildren. In its development, the unions have been decisive.
The revaluation of 8.5% in 2023, in accordance with the average inflation of last year, guarantees pensioners the maintenance of their purchasing power. Total spending will grow to 190,000 million euros, (11%) due to the increase in the number of beneficiaries and the substitution effect of the new, higher pensions. The higher cost entails more contribution from the State and more indebtedness. The pending reform that the Government is finalizing to face this increase in spending is considering raising contributions and extending the computation period to calculate the pension from 25 to 30 years, with elimination of the two worst.
The Bank of Spain has warned of a greater increase in pension spending in relation to GDP (12.7% in 2019) in the coming years because the aging process is delayed. It also indicates that the number of retirement and widowhood benefits received by women in relation to those over 65 years of age is 26% less than the EU average. Likewise, the number of disability benefits, in relation to the population between 16 and 64 years of age, is also 26% smaller than the European average.
The figures show that there is still a long way to go to reach the level of EU rights. The data on the amounts are also relevant. In December 2022 in Spain there were 9,994,836 pensioners —retirement, 6,302,297; widowhood, 2,356,613; permanent disability 949,781; orphans, 341,311 and family favor, 44,834—, according to Social Security. 60% of all pensions are less than 1,000 euros per month. In the case of widowhood, 64% is less than 800 euros. You can’t talk about a very generous system. In addition, spending on pensions is of proven efficiency: the EAPN Report indicates that the poverty risk rate is 17.5% for those over 65, compared to 21.7% for the population as a whole.
The analysis of pensions is broader than the macroeconomic one. Aging is a problem if society is considered from a strictly accounting point of view. On the contrary, it means progress if it is seen as a result of scientific advances and improvement of rights. In Spain, life expectancy (83.07 years in 2021) is 10 years higher than in 1975 (73.44 years). Maintaining benefits for people who live longer requires, logically, greater spending in relation to GDP. It is not acceptable that an improvement in health entails a cut in pensions. It will take a new social agreement, which includes boosting employment, to improve rights whose results have been so positive.
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