Retirement age may be raised beyond 67 in the future
Labor Ministry report also recommends raising the number of years of Social Security contributions for entitlement to a full pension
The government could raise the official retirement age beyond the current 67 years in the future to guarantee the sustainability of the state pension system.
The recommendation was contained in a report by a group of experts appointed by the Labor Ministry to examine the sustainability of the system. Other suggestions included increasing the number of years of Social Security contributions needed for entitlement to a full pension to 40 years.
The report was forwarded to the office of the so-called Toledo Pact, a cross-party body that oversees the state pension system that also includes the presence of the country’s main labor unions
Under changes to the state pension system approved in 2011, the retirement age is being raised gradually from 65 to 67 years in 2027. The number of years of Social Security contributions for entitlement to a full pension is also being increased gradually, while the period used to calculate the amount of the pension received has been widened to the level of contributions made in the last 25 years prior to retirement, compared with 15 years previously. Generally, people earn more at the end of their working lives.
The reform also left open the possibility of revising the factors used in calculating the sustainability of the system such as the amount of Social Security contributions, the retirement age and the number of years registered. Such revisions were initially only due to come into effect from 2027, but after detecting a possible “long-term shortfall in the pension system,” the conservative government of Prime Minister Mariano Rajoy decided to bring the process forward.
The report filed by the team of experts incorporates measures adopted by other European countries to deal with the impact of an aging population and the economic crisis on the sustainability of their state pension systems.
The Labor Ministry highlighted anomalies in the current system such as the average pension increasing by more than the average wage in the past decade and by more than inflation.