Rajoy makes pension-reform promise to Brussels

Spanish government to speed up law changes in bid to raise effective age of retirement

The Spanish government’s budget program for 2013-2014, which it handed in to Brussels last Friday, includes legal reforms that will affect the retirement age and speed up the date for implementing changes, now set for 2027.

The plan includes restricting access to early and partial retirement, and faster implementation of the new retirement age as well as different parameters for calculating pensions.

Pensions are currently the biggest expense on the Spanish budget. This year, the government will pay out 120 billion euros, representing around a quarter of all spending and over 10 percent of the nation’s GDP.

And these figures will only go up in future, to an estimated 15 percent of GDP, as baby boomers born in the 1960s reach their retirement age. This fact already led the previous Socialist government of José Luis Rodríguez Zapatero, a year and a half ago, to initiate a reform process that raised the retirement age from 65 to 67. The move created great social rejection and the conservative Catalan nationalists of CiU were the only political group in parliament to support it. The Popular Party (PP), now in power, voted against it at the time.

PP spokespeople then argued that a reform of the pension system was “inopportune, disoriented, imprecise and incoherent;” they also criticized the Socialist government for modifying such an important issue in such a “rushed way” and forecast that the system would be “more unfair” because it would lead to financial losses for workers even if they put in more years of work.

Now, the PP not only accepts those Socialist reforms, but is promising European authorities a new turn of the screw to ensure Spanish workers retire even later.

The effective age of retirement in Spain -- the average age at which an individual leaves the workforce for good -- is around two years lower than the legal age. When Zapatero began his reform, it was 63.5 years (one of the highest in Europe).

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