Madrid (EFE).- The president of the Independent Authority for Fiscal Responsibility (AIReF), Cristina Herrero, has warned this Friday that the pension reforms approved since 2021 will increase the public deficit in the long term, since the income measures offset the costs.
AIReF has published this Friday an opinion on the long-term sustainability of public administrations focused on the impact of ageing, which will have a special impact from the 1930s onwards.
One of the main ways in which aging will impact public accounts will be spending on pensions, which will reach a maximum of 16.3% of GDP in 2049, to later drop to 13.4% in 2070 -14.8% and 13.9%, respectively, if non-contributory and passive class pensions are excluded.
This increase is mainly related to the demographic evolution itself, but the opinion also analyzes the impact of the pension reforms approved between 2021 and 2023, which according to its calculations will increase the public deficit by 1.1 points of GDP in 2050 and 1 point in 2070.
The reforms “do not contribute to sustainability” to the extent that they increase the deficit, summarized the president of AIReF, a mismatch that derives from the increase in spending (2.4 points of GDP in 2050 and 2.3 points in 2070) is higher than the increase in income (1.3 points of GDP in both horizons).
However, Herrero has recognized that “it is difficult to see the possibilities of adjustment with the existing wickerwork and the restriction of the Pact of Toledo”, which agreed to the revaluation of pensions with the CPI, the measure that increases spending the most (2, 7 points of GDP in 2050) together with the elimination of the sustainability factor (0.8 points).
On the other hand, the incentives for early retirement (0.8 points of GDP in 2050) and the different evolution of maximum pensions and maximum contribution bases (0.4 points) reduce spending on pensions, while the change in the calculation of years will have no impact in 2050 and will only mean one tenth of savings in 2070.
On the income side, the self-employed contribution reform will be the measure that contributes the most (0.5 points of GDP), followed by the intergenerational equity mechanism (0.4), the evolution of the maximum contribution bases ( 0.4) and the solidarity rate (0.1).
Public debt will reach 186% of GDP in 2070
The study presented this Friday is based on a base scenario in which the Spanish population would reach 50.3 million inhabitants in 2050 and 52.1 million in 2070 thanks to the impulse of migration, in which the economy would grow by an average of 1.3% per year without fiscal rules.
Herrero explained that, according to these projections – “they are not forecasts”, he insisted – the public deficit will grow from 2026 to reach a maximum of 8.1% of GDP in 2055, to later be reduced to 7% until 2070.
This increase in the gap responds to the increase in spending on pensions, healthcare (would mean around 8.4% of GDP from 2049) and long-term care associated with aging (around 2% of GDP from 2060), as well as as the very cost of a growing debt, which would reach 6.9% of GDP in 2070.
The persistent increase in the deficit would raise public debt to 147% of GDP in 2050 and 186% of GDP in 2070 with a “very large aging effect”, according to Herrero.