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HomeLatest NewsHow the Escrivá pension reform affects my future retirement

How the Escrivá pension reform affects my future retirement

Date: March 31, 2023 Time: 09:11:39

Rivers of ink, some red and some blue, have flowed this weekend in the media about the new pension reformpromoted by the Ministry of Inclusion, Migrations and Social Security, led today by Jose Luis Escriva. However, there are many doubts that arise around this measure that finally, and after months of long and tense negotiations within the coalition, has gone ahead thanks to the support of United We Can. It will be early in the afternoon of this Monday, March 13, when Escrivá will meet again with the social agents to address the Topics about the second phase of the pension reform. All of this in the context of the proposal presented to them by the minister, which also has the endorsement of the European Commission. However, it does not seem that the Government of Spain has them all. For the businessmen, with Antonio Garamendi’s CEOE at the helm, the reform has “collection voracity” and a “populist” character, which “will undermine the efforts of companies in wage negotiations” with the unions. The main union forces of our country do not think the same. The general secretary of the CCOO, Unai Sordo, thought an agreement with the Executive on the second leg of the pension system reform was “possible” after learning of the latest proposal from the portfolio headed by José Luis Escrivá. However, Sordo admitted that the tripartite agreement with the businessmen was “difficult”.

Today the Government is going to present the proposal for the pension reform at the social dialogue table. pic.twitter.com/C80DdnhCwd

— Pedro Sánchez (@sanchezcastejon) March 10, 2023 How will this second pension reform affect citizens? who expect their retirement in the next twenty years. So let’s go in parts. Undoubtedly, the changes in the pension calculation period is one of the most debated points in recent months. Now, what exactly does it mean? The Ministry of Inclusion, Social Security and Migrations defends cChanges in the pension calculation period for it to be calculated either with the last 25 years of contributions or with 29 years of contributions, of which the two worst can be eliminated, so that in practice the calculation in this second case will be 27 years. At this point, the next question is none other than what would be the advantage of this initiative for workers. The potential pensioner would be allowed to choose between what already exists (last 25 years of contribution) or use a computation period of 29 years, eliminating the two worst listed years. In other words, the calculation period will remain at 25 years if it is not more beneficial to take a total of 27 years (29 years minus the two worst). would be in force for the next 20 years. The new option that is introduced -29 years excluding two- will be rolled out progressively over 12 years from 2026, which would especially benefit workers with irregular careers, according to sources from Social Security. In recovered accounts, through this new system, the pensioner will be offered both possibilities with the idea of ​​applying what is most advantageous for the worker who retires. The objective is that those with more volatile work careers do not see their pension diminished due to having received less income in their last years in active employment. With the aim of improving the pension fund, The Government’s proposal proposes a “solidarity quota” for the part of the salary that currently does not contribute due to exceeding the maximum contribution ceiling. This would be 1% in 2025 and would increase at a rate of 0.25 points per year until reaching 6% in 2045. However, it would not affect all workers equally. It would only apply to salaries greater than 53,946 euros in 2023.

We have reached an agreement to protect pensions and reinforce the redistributive nature of the system. We will do it by increasing the revenue that companies will contribute for the highest wages and by protecting the lowest pensions more.

— Yolanda Díaz (@Yolanda_Diaz_) March 10, 2023 The intergenerational equity mechanism would go from the current 0.6 percentage points to 1.2 points in 2029at a rate of one tenth increase per year to reinforce the system in years when there may be greater stress due to the retirement of the baby boom generation.

In terms of labor costs per hour, this increase of 37 cents continues to leave those of Spain well below those of our neighbors: 6 euros below Italy, and around 15 below Germany and France. There is no loss of competitiveness, and there is more social protection pic.twitter.com/osVpurInsh

— José Luis Escrivá (@joseluisescriva) March 10, 2023 The complement to reduce the gender gap in pensions would grow by 10%, in addition to the annual revaluationin the 2024-2025 biennium. The text of the Government also raises an improvement in minimum pensions, as demanded by the unions. What is proposed is something similar to what has been done with the interprofessional minimum wage (SMI), that is, to establish a path of convergence of the minimum contributory pensions for ensure they reach 60% of the median incometaking as reference the evolution of the minimum pension with a dependent spouse, which between 2024 and 2027 would reach 60% of the median income corresponding to a household of two adults. for the non-contributory pensions, a similar process is established: they would grow until converging in 2027 with 75% of the poverty threshold calculated for a single-person household, according to the Government’s proposals. Between 2024 and 2050, the maximum contribution bases are raised, a fixed amount of 1.2 percentage points is added to the annual amount of the CPI. The maximum pensions will be revalued year by year with inflation plus an additional increase of 0.0115 cumulative points each year until 2050. From 2050 to 2065 there will be additional increases. of gaps (understanding gaps as those months in which there is no obligation to contribute and which are taken into account to calculate pensions), although with improvements for women.

This reform reinforces the lower pensions, which emerge especially for women. To do this, we improve the coverage of contribution gaps that derive from job instability.

— Yolanda Díaz (@Yolanda_Diaz_) March 10, 2023 Thus, contribution gaps will be compensated with 100% of the minimum base for the first 48 months (4 years), and with 50% of the minimum base from the month 49, adding for salaried women 100% of the minimum base between the empty month 49 and 60 (up to the fifth year) and 80% of the minimum base between months 61 and 84 (from the fifth to the seventh year).

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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