Just over 17 million workers contributing to the Social Security program in Spain are supporting some 8.8 million pensioners. And for as many accounts as there are, the numbers are not working out. The new government just warned that the national Social Security program exceeded its 2011 bugget. Specifically, it anticpates a deficit of 0.2% of the national GDP, although all accounts have not been closed yet. The Social Security system has watched its surplus shrink at a vertiginous speed for several months.
While up until now the program could boast of a 6.48 billion euro surplus (according to the most recent budget report carried out in November), a bonus payment in December plus a payment to the National Statistic Institute (IPC following the Spanish abbreviation) mean that earnings coming from current contributors are not enough to service current benefits.
In December of 2010, Social Security spending doubled on account of the holiday bonus. And taking into account that revenues developed decreased at a steady rate in 2011 and spending also increased, the only factor that could have successfully leveled the imbalance in the system would have been interest generated from the programs Reserve Fund. The fund is invested mostly in Spanish debt products.
Holiday bonus to liquidate surplus funds
During the 2010 fiscal year, the pension payroll was running at around 6.8 billion euros per month. A payment that shot up to 12.2 billion euros in extra payments that December. In 2011, with some data still not collected, it is predicted that the rate of payments has performed similarly. Despite the fact that last year some pensions were frozen, the payroll was still around 7.1 billion euros per month. This amount is expected to double due to a bonus payment doled out during the December holiday season.
Further, compensation paid to the National Statistics Institute (IPC following the Spanish abbreviation) should be added to this amount. In 2011 the IPC payment totals to 855 million euros, which is much less than it was in 2010 when it reached 2.4 billion euros. This year only non-contributive pensions have to be compensated for. But other expenses will go up. For example, payments for subsidies and other lending services are also doubling, from around 800 million to 1.86 billion year-to-year.