Pension system on the ropes?

The Social Security proposals in the Lagares Report do not make sense if the system continues to exist. The panel of experts who build the report suggest putting a cap on social security contributions and retirement checks.

Their justification is that pensions should correlate highly with salaries that workers earn during their lifetime. To make that happen, they suggest creating a tax called the impuesto sobre nóminas, a kind of wage tax that the Finance Ministry could use as a political bargaining tool. This would entail a radical change to existing social protections in Spain.

It looks more like a system where current contributions assure future benefits. In the Lagares Report, Social Security contributions become a tax that would spread to the personal income tax. These taxes are not set in stone like others, such as paying retirement pensions or unemployment taxes.

The government is responsible for deciding how to divy up Social Security revenues. Its report nixes the max retirement check amount -- 2,554 euros per month in 2014 -- which makes the system unsustainable. Experts who created the Lagares Report could have explained more clearly that their proposal aims to kill the existing Social Security system.

This is one of many options, although senseless. It is not as easy as they say to transition from one system to another. Are policymakers forgetting that people who pay social security for years earn the right to receive benefits when they retire? The impact on society this will have? We are not even seeing proposals to create an alternative system where people create their own private plans.