Saturday, January 30, 2010

Raising the Spanish retirement age isn't enough

Spain is proposing to fall into line with other European countries like the UK and Germany and gradually raise the retirement age (more accurately the age at which the state pension becomes payable) from 65 to 67 by 2025.

The arguments for this proposal are practically irrefutable as far as I can see and, without rehashing them all, one only has to look at the ageing profile of the Spanish population, the state of the government finances and the dramatic and remorseless rises being recorded in life expectancy, to see that this move won't be the last of its kind.

The Guardian reported the details of the proposal which still has to achieve parliamentary approval here:
Apparently the unions are against the move. No great surprise there but what was surprising was that I found myself nodding in agreement as I read the union bosses trying to justify their opposition. One said: "The government is getting ahead of itself by concentrating on cutting pension spending and not looking at policies to boost revenues." Well I can't agree with the first part of that comment. The figures show there will be double the number of over-65s by the middle of the century and the government is already struggling to pay its bills (latest numbers showed public sector deficit at 11%). But I was sympathetic to the second comment - no amount of tweaking benefits and whittling away pension rights will resolve the problem on its own. We have to have a plan that will raise the amount of money available to pay pensions and that needs a fully-functioning, growing, efficient economy. Sadly with 44% of Spanish under - 25s out of work it looks very unlikely that a comfortable retirement for all will be affordable whatever policies are announced.

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