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Affluent Christian Investor | May 28, 2023

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Spain Chooses Short Term Pain

… Which is a lot smarter than long term insolvency. If you don’t have many children and those few children don’t have many children, then you simply cannot afford the most generous pension system in the world, because there’s nobody left to pay for it. Spain under its conservative government is facing reality. Last year it liberalized its labor regulations. Now it’s reforming its pension system. Next year it’s planning to reform taxes.

“The new regime breaks the link between pension increases and inflation, in a move that seeks to balance Spain’s deficit-stricken social security system. Pensions will rise by a minimum of 0.25 per cent a year and can only rise further if the state pension fund is in surplus. Payment rises are capped at 0.5 per cent above inflation. From 2019, pensions will be calculated with the help of a new “sustainability factor” that links payments to life expectancy – and ensures that pensions will actually fall as the average lifespan increases.”*

 

*FT.com requires a subscription.

 

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