Group of European Pensioners from Savings Banks and Financial Institutions


Index of documents > Euromeetings Magazine > Euromeetings Number 16

In 1995, the agreement of the Spanish Chamber of Deputies, known as Toledo's Pact, stated: "It is advisable to adapt, in a gradual and progressive way, the retirement age with the Spanish population's life expectancy". The concern for the pensions system's sustainability is a response to the implications of the experts about the aging financial impact. It is about a European concern, written in the Green Book of pensions, published in 2010.

The accumulated causes that put at risk the pensions system are the population's aging, consequence of the life expectancy's increase and of very low birth rates, and the delay in the first job incorporation owing to the studies prolongation or to the labour economics difficulties. Moreover, the work is abandoned in previous ages from the normal age of retirement, in such a way that the real retirement age is 61.4 in Europe and 62.6 in Spain. The financial balance that must exist between contributions each time less important and compensations each time more important, is getting broken. The system will be in deficit in a few years. Therefore, it will be necessary to restore the system reducing the pensions, prolongating the work period or increasing the contributions or taxes. In Spain, the recent legislation has chosen the two first measures.

The legal retirement right is delayed from 65 to 67 years old. The criticism about a compulsory and forced retirement age comes from Toledo's Pact itself. According to all the opinion polls, the opposition between right and left politics and the population in general do not agree with it either. Retirement is a right, that comes from the right of work (right and duty recognized in the Constitution), therefore it must be voluntary and not compulsory. People should get retired when they would like to, at 55 or at 75. With financial and other sort of consequences, of course. If someone gets retired at 50, the pension should be ridiculously low. If someone gets retired after 70, it should be relatively higher. As fixing a compulsory age is unnatural, because too low or too important, depending on the cases, some exceptions have been made for the dangerous and difficult jobs, but these exceptions must still be determined. People are ready to work as white-collar workers (government employees can get retired at 65 but most of them continue working until 70), but not as blue overalls. In these ones the population with less resources is greater and, as we already know, less health. Moreover, they begin to work earlier. With the disruptive present unemployment rate in young people (43.6%), in a reciprocal way, there is already 64% of young people between 20 and 24 working. Luckily, therefore, this 64% of the population will be able to get retired, without any economical repercussions, when they will be 65, because they will have contributed more than 38.5 years, which is the complete labour age according to the new law.

The opposition to the compulsory retirement at one particular age does not mean to be against the necessity of the true retirement age prolongation. That is why some social, fiscal and labour bonus are suggested, increasing the pensions, even the most important ones, the coexistence between salary, pension and part-time work is defended, because they are elements that are shyly written in the new legislation.

The incentives have to be addressed most specially to the businessmen. It is very difficult for someone who is more than 50 to find a new job after loosing it. A young person is preferred, someone with a low salary and often with an education more current than an older employee "more expensive" and maybe obsolete. And in case of crisis of the company, the elders are those who are first fired. Is it therefore indispensable to reduce the social security's burden that the companies endure for people who are more than 55 for example, as pointed out in Toledo's Pact. The salaries’ increase in these ages should be restrictive for the proper aged employees’ good. With these measures, the elderly workers would not be more expensive every year for the company.

Moreover, there should exist some penalizations for the voluntary advanced retirement and for the extinction of the contracts for elderly people on the part of the companies, when these companies have benefits. Which is more important, as Toledo's Pact says, "It is a priority to  bring the regulations that force the groups or people to the compulsory retirement against their wishes and capacity up again. An age limited must not be established, in order to work in a freedom and fundamental rights regime".

The new Law incorporates the concept of complete work degree course, the Social Security's contribution during 38 years and six months. When the one of 35 years was established at the beginning of the last century, the life expectancy was very lower than 65. If each time people begin to work later and live more years, then this number of 35 years is totally out of step.

The savings of retirement age prolongation costs to 67 will not be those the Government is waiting for, as less than 40% of the working population will get retired after 65, without incentives for the businessmen to keep their elderly workers. In fact, as 50% of the population will get retired before being 60, the delay of the voluntary retirement age from 61 to 63, the elimination of the voluntary retirement at 64, the fixation of a minimum age of 61 if there is a crisis and the increase of the complete work degree course are more effective than the fixation of a legal compulsory age and the savings will come from these measures, that could be connected with a voluntary retirement.

It is interesting to notice that the public opinion has given a big importance to the retirement prolongation about the increase of the reckoning base, of the control base from 15 to 25 years. Nevertheless, the impact on the future pensions reduction is very significant, more or less an increase of 1% every year of the reckoning base. In view of the perspectives of the long period crisis of the retirement model valid until now, it is about a first attack, that will surely be followed later on by other similar measures in order to assure the sustainability of the prolongation-system (retirement age at 70 and control reckoning base at 35). Starting from 2027, the fundamental parameters will be reviewed every five years because of the differences between the evolution of life expectancy at 67 and the one that will be in 2027.

It is surprising that the priority has been given to the pensions instead of other matters more serious and pressing, like the unemploye- ment that affects directly on the System's income. Government has preferred to act first on the expense than on the income, when these ones affect not only the pensions but the life of millions of people too, and when the present income rate in pensions on the Spanish Gross Do-mestic Product is calculated, we can remark that it was less than 9% of the GDP in 2010, while the European average is of more than 12%.