The second half of the year prepares even more pension reforms within the second block agreed with the European Commission within the framework of the Recovery, Transformation and Resilience Plan (PRTR), specifically within component 30. The reform of the self-employed is lasting more than expected, and Minister José Luis Escrivá has already advanced his intention to work as soon as possible on the second package of measures, one of them the adequacy of the calculation period for the calculation of pensions: the measures in this specific aspect can modify the amount of the pension between 6.5% upwards or a cut close to 9%, on average.
This follows the calculation made by the Research Group on Pensions and Social Protection of the University of Valencia and Extremadura. The measure that the Escrivá portfolio must negotiate with the social agents, as set out in the 2022-2025 Stability Plan, aims to adapt the calculation of the pension to new careers. The options to materialize this reform, a priori, are several. Choosing two in particular, the researchers set the regulatory base at 25 years and 35 years with the option to choose the top 25 of the career.
The choice of the 25 most favorable years within the last 35 years results in an average increase of 6.54% of the pension, with a projected increase in spending of 0.67% of GDP. This measure declines the balance of the adequacy of public income for retirees against another basic principle, that of sustainability.
“The final impact will also depend on how the contribution gaps are integrated; that is, on how the bases of those periods in which contributions have not been made are filled. In addition, this would distance the system from the greater contribution that the simple extension to 35 years of the calculation period of the regulatory base”, explained the economists.
In fact, the variation in the comparison in the choice of the 25 best years and the 35 years is significant. If the reform moves towards an extension of this pension calculation period to 35 years, the regulatory base would be 8.8% lower than the choice of the most favorable 25 years.
“Initially, the increase in the number of years of computation, from 25 to 35, for the calculation of the regulatory base is a measure that would improve the sustainability and contributory nature of the system, by increasing the relationship between contributions and benefits, but the results are totally different if, as is the case analyzed, only the 25 best years are included in the calculation of 35 years”, argue from the Research Group on Pensions and Social Protection.
Regarding the impact on the sustainability of Social Security, the Ministry previously explained to elEconomista.es that it is “neutral” and that its main objective would be to “avoid further damage” to the pensions of seniors who lose their jobs in the years prior to retirement.
This is explained because spending on pensions increases -that is, sustainability worsens without complementary measures on the income side- and contributory equity worsens, understood as the relationship between contributions and benefits. And this is shown in the calculation of the weight on GDP: while a regulatory base of 35 years would reduce the weight on GDP by 0.88% in the middle of the century, the election of the 25 best would add 0.67 % for the same stage.
Greater impact on freelancers
If the Government adapts the measures to the different professional profiles and characteristics of their careers, the work trajectories and the different types of workers would also specifically suffer a hypothetical extension of the calculation period of the calculation of pensions to 35 years. Among them, the self-employed, women and delayed retirement obtain a greater reduction in their initial pensions compared to their peers.
Self-employed workers would be worse off than the general regime. The self-employed would face a reduction of their initial pension of 10.3% compared to the decrease of 8.6% in the general regime. The Reta does not include the price gaps (months priced at zero) that penalize the regulatory base and that is one of the objectives to be covered in José Luis Escrivá’s portfolio.
In the case of women, with this measure they would see their first pension reduced by an amount similar to that of the self-employed (10.3%), opening a gap of almost two and a half points compared to men (7.9%) by the labor characteristics of each gender.
By retirement age
The data handled by the group of experts show that workers who decide to extend their careers until they delay their retirement until they exceed 65 years and 8 months would receive a greater penalty. Specifically, delayed withdrawals would see their retirement reduced by 11.6%, while early withdrawals would do so by a figure close to 8%.
What does seem evident is that from a general reading, extending the calculation to 35 years equalizes the pensions between those with a longer working career (14.9% penalty) and those who contribute fewer years (7.5 cut). %).
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