The government has taken a big bite out of the national pension system. In less than two years, it has eaten up 24.6 billion euros of the Social Security Reserve Fund, which is 37% of its high water mark of 66.8 billion euros.
The figure is alarming and confirms what experts have warned about: the Reserve Fund will dry up in five years if we were going to wait until 2019 to factor in life expectancy when calculating new pension rates. Waiting this long does not make sense when the pension payroll has already reached 8 billion euros every month. The reforms that will go into effect this year only apply to some pensions, and while measure is good, it's not good enough, because unemployment and new low-quality jobs are not helping to support the pension system. Its Reserve Fund has become a key piggy bank that officials use to avoid asking the national government for a loan or to run a deficit. True, the Reserve Fund has allowed Social Security to weather the crisis, but that shouldn't cover up the fact that the system has serious problems. The number of people who will retire in the next several years could double the size of the retirement pool, which will require a new long-term plan.
Pension reforms are happening too slowly, and tax reforms are also not providing the savings that officials expected. Ignoring the problem will prove to be a problem for retirees, who know that the system is moribund and job growth is stagnant.
