Social Security deals with the second reform of the system, after linking pensions to inflation, to be completed before the end of the year
Among the commitments (milestones, they are technically called) entered into with the European Commission to receive the recovery funds, that of the pension reform is not only one of the obligations that can have the greatest economic impact, but above all the social ones.
At the time, the government decided to implement a two-part reform for Brussels. The first, which is already in place, concerns the revaluation of pensions based on the CPI (Consumer Price Index). Specifically, it will be calculated using the average price increase recorded between December of the previous year and November of the current year. It is the measure that the government wants to apply for the next 2023, with a rate that should not fall below 8%, according to the inflation forecasts of various analysis houses.
That first part of the pension reform also included the Intergenerational Equity Mechanism: an additional contribution of 0.6% of the contributions for common contingencies.
But the second part of the reform is yet to come. For negotiation. And to define. It will be the period related to the years that social security will take as a reference to calculate the old age pension and, on the other hand, the maximum contributions of the employees who earn the most each year.
The prize races will be the cornerstone of the change to come from 2023. And the controversy has been served since last year. The Ministry of Social Security is working to approve this new model before the end of the year. Since January 1, the system has already taken into account the last 25 working years to calculate the level of the pension. Until 2011, social security only counted the last 15 years of contributions. But with the reform that has since been approved, that number has grown to 25 years.
Revaluation and CPI
What will the new figure be? It’s the great unknown. The commitment agreed with Brussels means that these calculations are “extended” as indicated in the document sent to the Commission. Although it does not specify how long or under what conditions. The Minister of Social Security, José Luis Escrivá, already ruled out last year that they would take the last 35 years as a reference. In practice this is almost the entire working life. Although it will take into account the periods of interruption (e.g. unemployment) so that each employee chooses the period that best suits his circumstances.
The ministry is also working these weeks on raising the premium bases for maximum pensions. So far, the basis on which it is quoted has been capped at 4,139 euros per month, with a contribution of 1,171 euros, regardless of whether the salary is much higher. The increase will be “very gradual”, although it is still unknown whether it will be phased in over the next 20, 25 or 30 years.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
