The Minister of Inclusion, Social Security and Migrations, José Luis Escrivá, during a plenary session in the Congress of Deputies, on March 30, 2023, Eduardo Parra - Europa Press
The Minister of Inclusion, Social Security and Migrations, José Luis Escrivá, during a plenary session in the Congress of Deputies, on March 30, 2023, Eduardo Parra – Europa PressEDUARDO PARRA (Europa Press)

The Plenary of the Congress of Deputies has given the green light this Thursday to the decree law that includes the second part of the pension reform that completes the one already approved in 2021. The text, which focuses on reinforcing the system’s income without making any adjustments In spending, it has been supported by 179 government deputies and the majority of its parliamentary partners, fundamentally, while it has been rejected by PP and Ciudadanos and Vox has abstained.

This decree, in addition to having been validated, has also been voted for it to be processed as a bill, which will allow the incorporation of novelties into the text by parliamentary groups. The forces that have given their yes to this second phase of the Social Security reform, which will also promote the disbursement of the fourth installment of European funds, have been: PSOE, Unidas Podemos, Esquerra Republicana (ERC), PNV, PDeCAT, Canarian Coalition, Compromís, PRC, Teruel Existe and Más País. For their part, Vox, Junts and EH Bildu have abstained, while the PP, Ciudadanos, Foro Asturias, the CUP and the BNG have voted against.

Prior to the vote, the Minister for Inclusion, Social Security and Migration, José Luis Escrivá, asked this Thursday for support for this decree which, according to what he said, means “complying with the mandate given to us by the Pact of Toledo and with the milestones committed to the European Commission” within the framework of recovery plans. As summarized by the minister, the reform as a whole, with its two phases, guarantees the adequacy of pensions, with the guarantee of revaluation of the CPI and the measures to reduce the gender gap; reinforces the equity and solidarity of the system with a new dual system for calculating the pension (with the last 25 years or 29 years eliminating the worst 24 months, whichever is more beneficial for the retiree) and with a new treatment of gaps quote; and, finally, it strengthens sustainability with a series of measures that increase the income of the system, such as the increase in the Intergenerational Equity Mechanism (MEI), the extension of the maximum bases and a new solidarity quota on the highest salaries.

In addition, Escrivá has also referred to the new semi-automatic mechanism (it is not fully automatic because it allows the Government of the day to make the adjustments it deems necessary in the face of possible budgetary deviations and only if it does not do so does the automatic rate increase operate) that has called a “closing clause”. This is a formula that will be implemented as of 2025, with the preparation every three years of a report by the Independent Authority for Fiscal Responsibility (Airef), which assesses the existence of possible deviations in the financing of the system based on the compliance with the expected increase in income with the approved measures and the evolution of pension spending. If the thresholds of these variables (if the increase in income does not reach 1.7% of GDP and pension spending exceeds 15%, both on average in the period 2022-2050) experience any type of excess, the Government that If you are at that moment, you must try to take measures in accordance with the social agents and the Toledo Pact and, in the event that you do not succeed, a new automatic increase in social contributions will operate.

Precisely, the fact that the focus has been placed on increasing social contributions to increase the system’s future income has been the reason why employers have not supported this second part of the pension reform, which they have supported unions. In addition, various public bodies –such as Airef or the Bank of Spain–, private –such as Fedea or Funcas– and professional associations such as the Institute of Spanish Actuaries, have directly denounced that the collection levels foreseen by the Government with these new measures will be manifestly insufficient to guarantee the sustainability of the pension system, as Escrivá has said that it is guaranteed “in the short, medium and long term”.

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