In the coming decades, Spain is expected to allocate a higher portion of its GDP to public pension payments due to a reform introduced by Jose Luis Escriv. According to the Aging Report by the European Commission, this percentage is projected to reach 16.7% in the year 2070, up from an estimated 10.3% in 2022.
Prior to this reform, Spain was ranked lower in pension spending among European countries. However, measures such as annual pension revaluation based on inflation have led to significant increases in pension payouts. While these measures were intended to ensure that pensioners maintain their purchasing power in the future, there is no consensus on their effectiveness.
The reform also includes changes to contribution rates for both self-employed and salaried workers, as well as adjustments to the computation period for pension calculations. These measures are expected to increase Social Security income as a percentage of GDP from 12.9% in 2022 to 14% in 2070, although they may not fully offset the rise in pension spending.
Despite this projected increase in income, the system is still expected to run a deficit, which is predicted to worsen over time. To address any imbalances, the reform includes a clause that allows for additional adjustments to be made if necessary. The exact nature and extent of these adjustments will depend on ongoing evaluations by the Independent Authority for Fiscal Responsibility.
In conclusion, while this reform aims
