Spain’s Audit Office says €300 million a year being paid to deceased pensioners

Almost 30,000 Spaniards whose deaths have been officially registered continued to receive a state pension in 2014, costing the state some €300 million a year, according to a new report by Spain’s Audit Office.

The survey, for the year 2014, found a series of “holes and deficiencies” in the way Spain’s Social Security system updates deaths of pensioners, and outlines a number of recommendations to prevent money being paid to people who have died.

The Audit Office discovered the problem by cross-checking deaths recorded between 1987 and August 2015 with the list of people receiving a state pension in December 2014.

Researchers at Valencia University estimate a €17.3 billion shortfall in the state pension fund, an increase of €750 million on last year

“There was a total of 29,321 retirees receiving pensions amounting to €25.3 million per month whose names were included in the National Statistics Institute’s (INE) register of deaths,” says the Audit Office’s report. It noted that 95% of those names were still in receipt of a pension in October 2015.

But a spokesman for the National Social Security Institute (INSS) denies the Audit Office’s claim, saying that after it checked each name of a retiree in receipt of a pension with the INE’s register of deaths, it discovered that the only link between the two was the deceased’s identity card number, but not the name. “It seems highly likely that there have been errors in entering identification numbers, or that they have been duplicated,” he added.

The Audit Office replies that the root of the problem is due to the lack of information about deaths provided to the INSS by the Registry Office and the INE. It also questions the way in which the INSS cross-checks information. “The INSS doesn’t employ effective controls over who it pays pensions to, and neither do the banks through which pensions are paid,” says the Audit Office.

The INSS looks set to rack up the biggest deficit in its history this year, based on figures for the first half of 2016. Last week, it borrowed €8.7 billion from its reserve fund to cover the traditional summer bonus payment. A few days earlier the Labor Ministry admitted that there was less money in the system than last year. Researchers at Valencia University estimate a €17.3 billion shortfall in the state pension fund, an increase of €750 million on last year.

The Spanish government said it expects the public pension system this year to register a deficit equivalent to 1.1% of GDP.

English version by Nick Lyne.