increase CPI pensions and encourage delayed retirement

Posted: Friday October 23 2020 20:13

The Pact of Toledo reached an agreement on Friday to renew its recommendations, which must now be voted on in Committee next Tuesday and, finally, before the Plenary of the Congress of Deputies.

Among the main recommendations included in the text, we can cite: cleaning up the deficit of the pension system by reorganizing its spending, recovering the CPI as a benchmark to increase pensions, promoting delayed retirement, retirement plans complementary business and choose the best listing years to fill listing gaps.

Here are the main recommendations:

Recommendation “zero”

– Recognition of social security as “the backbone of the welfare state, the norm and the mark of a modern and cohesive society”.

– Rejection of a “radical transformation of the system” which breaks the principles of intergenerational or intragenerational solidarity, sufficiency and equity.

– It does not consider it appropriate to separate the pension system according to the type of benefit.

– The financing of the system must be adapted to the nature of the benefits (non-contributory pensions, through the general State budget).

– The basic source of funding is contributions, but to ensure sustainability and sufficiency, additional resources “based on general taxation” can be obtained.

Clean up the deficit

– Recognize that employment policies explain “to a large extent the existing deficit” and that contributions bear expenses which “should be borne by the State”.

– The general state budgets must cover the reductions in contributions, assistance benefits (non-contributory), aid for early retirement, premiums for special schemes and part of the benefits linked to birth and to care of the minor and pension supplements.

– Timeline for reorganizing spending to end the deficit and lending until 2023.

– Study what has been wrongly assumed to have a “trustworthy image” of Social Security.

How to increase pensions?

– Defense of maintaining the purchasing power of pensions.

– Re-evaluation according to the real CPI.

– Any exceeding of the CPI will be financed from other resources.

Bases and trading periods

– Maintain the minimum contribution period necessary to access the contributory pension for 15 years.

– Assumes the extension from 15 to 25 years to calculate the regulatory base and appeals to assess its impact.

– Consider the choice of the best years to calculate the pension (avoid contribution differences).

– Evaluate the progressive extension of the contribution period necessary to access the maximum pension.

Retirement age

– Bringing the effective retirement age closer “as much as possible” to the legal age.

– Encourage the permanence of active workers through better incentives and promote voluntary extension beyond the legal age (positive evaluation of the reconciliation of pension and salary).

– Analyze the amount of penalties for early retirement costs and their impact on pension equity, with particular attention to forced cases and long contribution periods.

– Give the government three months to propose a response to the “unfair” effects of these sanctions.

Sufficiency of the pension

– Need to have an objective defining the adequacy of pensions.

Complementary systems

– Preference for plans based on collective bargaining, mainly non-profit.

– calls for fiscal and legal improvements for these systems and specific formulas to support low wages or “more vulnerable” professional careers.

– More transparency in savings plans to avoid negative returns and the need to regulate “more intense protection formulas for invested savings”.

Gender gap

– Guarantee equal access to employment, working conditions and joint responsibility for care, particularly in terms of permits.

– Introduce corrections against involuntary contribution differences and discriminatory treatment in the pensions of part-time workers.

Reserve fund

– Take up the rule according to which excess contributions, “without any limit”, must be incorporated into the Reserve Fund.

– The decrease in the reserve fund’s assets “in no case will it be used” to justify the reduction in the amount of benefits.

– Increases the convenience of establishing a minimum backlog, subject to an enhanced availability rule.

Effects of digitization

– In line with the correction of “excessive dependence on contributions”, if the technological revolution implies more productivity but no employment, “find innovative mechanisms that complement the financing of Social Security, beyond contributions social ”.


– Promotion of policies facilitating the transition from the education system to the labor market, in particular with the promotion of vocational training and university-business interdependence.

– Improvement of the working relations framework to fight against the precariousness of young people.

– Guarantee and improve the social protection of scholarship holders through legislation which improves their social protection and guarantees their right to an “adequate and fair” professional career.


– The Administration will step up its due diligence to avoid racism or discrimination in the workplace, given the greater vulnerability of migrants.

– Channel migratory flows through mechanisms guaranteeing the integration of migrants into the labor market.

– Facilitate the management of recruitment, affiliation and integration procedures into the system.

– Promote the social integration of migrant workers and their families.

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