Proposed pension reform will cut seniors’ spending power, says labor union

Leading labor union CCOO on Friday presented a study that contradicts the government’s assertion that its planned reforms to the amount of state pension retirees receive will not lead to a loss of purchasing power.

The government last week presented proposals under which pensions would be revalued annually by between a minimum of 0.25 percent and a maximum of inflation plus 0.25 percent, according to the state of the finances of the Social Security system in any one year.

Currently, pensions are automatically revised upwards annually to offset the impact of higher-than-expected inflation, a practice the conservative government of Prime Minister Mariano Rajoy declined to respect last year, arguing that reducing the public deficit took priority. The previous Socialist administration of José Luis Rodríguez Zapatero froze pensions in 2011 as part of an austerity drive.

CCOO calculates that the amendments put forward by the government would reduce the spending power of pensioners by between 15 and 28 percent over the course of 15 years. It said that after that period, if the Social Security’s coffers allow for the maximum increase contemplated by the government of inflation plus 0.25 percent, it would take 113 years to recover the purchasing power lost in the previous 15 years.

The union is also at odds with the government’s assertion that, under the formula it has suggested, pensions would cease to be the object of political debate, given that “most of the data used by the formula would depend on decisions taken annually by the government.”

The CCOO said it planned to put forward alternative measures to ensure the sustainability of the pension system.