Since it began, three years ago, baby boom retirementSpain is beginning to notice in its public coffers the effect of the imbalance between the highs and lows in the system. Until those born in 1978 retire, that is, for 18 years, the State will have to make a titanic effort to finance the annual expenditure on contributory pensions, which will be approximately 16% or 17% of GDP.
Spanish public debt continues to grow. The threat to Social Security accounts is latent and it must be taken into account that it will continue to increase. Only in 2023 were there 326,949 new pensioners compared to 265,060 new onesThis translates into a difference of 23.4%, the highest in the historical series recorded.
The situation is really alarming for Spainas this gap doubles the 9% difference recorded in 2022 and exceeds the average of the years prior to the pandemic, which was 15%.
The problem: in detail
In June 2024, according to official data, 10.16 million pensions have been registeredwhich represents a variation of 1.22% compared to the same month of the previous year. The start of retirement for those born in 1958 and 1959, that is, those who turn 65 and 66 in the current year, does not help to tip the balance.
The autonomous communities in which the monthly variation in the number of pensions has grown the most have been, with data from June 2024: Balearic Islands (0,30%), Canary Islands (0,29%), Murcia (0,24%), The Rioja (0,22%), Valencian Community (0,21%) y Navarra (0,20%).
According to records recently published by the National Institute of Social Security (INSS), The number of new retirees registered in 2023 was the highest in the historical seriesafter 2018 (when 328,159 registrations were recorded) and 2022 (with 327,872 registrations).
In 2023, almost 900 people have retired every day compared to the 2,000 who became employed. On the contrary, according to data from the Active Population Survey (EPA), Employment increased by 783,000 people in 2023 (3.83% more). Thus, for every two people who enter the workforce, one leaves.
Source: Lanza Digital
Regarding the lowthese fell by 11.4% (265,060 people). This is the lowest figure since 2017 and represents a return to the natural trend recorded before the pandemic as a result of the increase in life expectancy. After the maximum declines that occurred during the years of the pandemic, the number of pensioners has grown again at interannual rates of 2% to 8% compared to 2018.
Early retirements have fallen, from 43.3% of the total to 34.3% in 2023. So far in 2024, the figure stands at 34.1%.
The Spanish population continues to age
All these factors make that the retirement age is increasedgoing from 64.2 years in 2018 to 65.1 in 2023. More and more people are delaying their retirement age and 10.5% of new pensioners are joining the pension system compared to 4.8% before the reform. Delayed retirements are brought forward to 68 or 69 years of age.
In 2023 there were a total of 322,075 births in Spain, which is the lowest figure since the beginning of the series in 1941, according to the latest data from the National Institute of Statistics (INE).
Added to this is that Spain is the EU country with the highest life expectancy (84 years). Above the community average (81.5 years), they are followed by Italia (83.8 years) and Malta (83.6 years).
A long-term problem
The number of pensions to be paid will rise from the current 9.2 million ‘payments’ to about 16 million benefitsAdded to this is the unstoppable arrival of immigrants, who will become the only positive force for demographic growth.
Data favourable to the Government’s thesis
The ‘baby boom’ effect continues to be felt in the pension system and drives what the disbursement exceeds 13% of GDP. New hires received an average salary of 1,453.14 euros per month, 19% more than the average pension for those leaving, which amounted to 1,216.42 euros.
It all happens because new payrolls are increasing at an annual rate of 1.8% and previous ones increased by 8.3%. So, The average pension has reduced its gap with respect to new registrations to a minimum of 5%. More than double the rate of decline, as until 2023 it had been the other way around.
Hypothetical solution
The Foundation for Applied Economic Studies (Fedea) has recently proposed the creation of a new employment contract. This would allow for the compatibility of salary with the collection of a pension, once the retirement age is exceeded. In order not to discourage companies from continuing to employ such people, with their public pension assured, severance pay would be eliminated from these contracts.
The real deficit of Social Security is in its contributory part, which rises to 55.919 billion eurosaround 3.8% of GDP.
This is as a result of Spain facing a more intense aging process than other industrialized countries due to: high life expectancy, a fertility rate among the lowest in developed countries (1.19 children per woman) and a certain delay in the aging process. With the phenomenon of ‘flexible retirement’ it would be possible to make it compatible with the salary.
Source: www.elblogsalmon.com
