In recent years, the European Commission has published a report predicting that Spain will have to allocate a larger percentage of its GDP to public pensions in the coming decades. This change is mainly due to measures approved by former minister Jose Luis Escriv, including annual pension revaluations based on inflation.
While these increases in spending are expected to have a significant impact on Social Security accounts, other initiatives such as increases in contributions and changes in pension calculations are designed to generate more income for the system. The overall goal is to maintain the sustainability of the pension system by balancing income and expenses.
However, despite these planned increases in income, the system is still expected to face a budget deficit, which will worsen over time. To address this issue, the reform includes provisions for automatic adjustments based on evaluations by the Independent Authority for Fiscal Responsibility (AIReF).
The AIReF will play a key role in monitoring these changes and providing recommendations to the government if further adjustments are required. The reform aimed to maintain the purchasing power of pensioners and ensure that pensions would not lose value in the future. However, it also recognizes that additional adjustments may be necessary in the future to address any discrepancies between income and expenses.