An aging population and falling birth rate combined with longer life expectancy are three factors that will push back the retirement age in Spain. The 2011 pension reform, which the EU approved, increased
the official retirement age to 67 years. The law provided a grace period that would gradually move the retirement age from 65 to 67; the transition starts this year and will conclude in 2027.
Yet again the crisis has wrecked expert forecasts. In 2012 the Social Security system?s deficit rose to 10 billion euros and nearly exhausted the system?s savings and created an unsustainable budget imbalance.
This is the reason that the government has decided to delay applying the so-called ?sustainability factor? and the European Commission?s mandate for them to do so. The sustainability factor is a number that relates the number of retirees with the average life expectancy and economic situation, among other criteria.
Utilizing the factor will push back the retirement age and lower pension amounts, because it will take longer for people to start receiving state pension payments if these people want to receive 100% of their retirement. The immediate effect is a significant reduction of state spending. But the measure will be hard on the general population.
Especially if, as it seems to be the case, the measure is adopted immediately and high unemployment continues. Aging workers who lost their job during the crisis and no longer have a chance to re-enter the job market will suffer most.
But if the retirement age is not pushed back, according to the new formula, then the sustainability of the retirement system will be in jeopardy. And keeping the system alive should be the government?s number one goal.
