The Minister of Inclusion, Social Security and Migration, Elma Saiz, estimates that the Social Security Reserve Fund will reach 14,000 million at the end of 2025 after managing to exceed 9,300 million in 2024. The commonly called pension piggy bank is in its highest level since 2017, after years of being ’emptied’ as a result of the deficit that the public system has been carrying since 2012. But there is a trick accounting: Social Security continues to spend more than it earns (almost 30 billion in 2024) and, to compensate for this, it collects income on all salaries through an additional fee that does not improve the pension. In exchange for ‘filling’ the piggy bank, the system does nothing but go into debt.
After years of being deserted and without receiving contributions, the Reserve Fund has been reactivated since the creation of the aforementioned Intergenerational Equity Mechanism (MEI), a new type of contribution applied to the payroll of all workers.
Its application began in 2023, when it began to be taxed at a rate of 0.6% with the approval of the unions and the European Commission, which asked to tighten this quota as a safeguard clause in case a deviation in spending is detected in the triannual review that the reform passes. In fact, the current model is highly influenced by a UGT proposal. Currently, this payroll is at 0.8% and will reach, at least, 1.2%.
Although it is defined as the collection of social contributions to assume common contingencies such as retirement, sick leave and other types of contributory benefits, the reality is that It is a finalist fee that does not improve the collection of the future pension. What does it mean? That the overpricing It is strictly solidarity-based and will be used to pay a part of the pensions of the baby boom generation.
The Secretary of State for Social Security and Pensions, Borja Suárez, has provided the forecasts at the meeting of the Reserve Fund Management Committee that he himself has chaired in the presence of senior officials from the Economy, Treasury and the Administration of the pensions.
Minister Saiz subsequently boasted about the data: “The pensioners of today and also those of tomorrow can rest assured,” considers the Navarrese, ignoring that it represents an accounting trompe l’oeil in the face of the constant deficit that causes an increase in the system’s debt (which already greatly exceeds 100,000 million).
From the active to the boomers
The Government expects that the pension piggy bank will accumulate up to 130,000 million, between contributions and returns, at the beginning of the next decade (in 2033). It will then be when the Executive in power will have the possibility of using this amount for two decades to pay a part of the baby boom pensions.
The first year, in 2033, will allow 0.1% of GDP to be used. The law allows recourse to money from the Reserve Fund for a maximum value of 0.91% of annual GDP in the stage of greatest financial stress due to the retirement of the baby boom, at the end of the 2040s.
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