The financial impact of Spanish pension reform: A quick estimate

In this paper, we present a preliminary estimate of the financial impact of the recent reform of the Spanish pension system. After updating the projections of pension expenditure constructed in de la Fuente and Doménech (2010) for the period 2008-2060, we analyze the impact on this variable of raisi...

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Detalhes bibliográficos
Autores: Fuente, Ángel de la, Doménech, Rafael
Tipo de documento: artigo
Estado:Versión aceptada para publicación
Data de publicação:2012
País:España
Recursos:Consejo Superior de Investigaciones Científicas (CSIC)
Repositório:DIGITAL.CSIC. Repositorio Institucional del CSIC
OAI Identifier:oai:digital.csic.es:10261/113522
Acesso em linha:http://hdl.handle.net/10261/113522
Access Level:Acceso aberto
Palavra-chave:retirement age
pension reform
Spain
jel:H55
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spelling The financial impact of Spanish pension reform: A quick estimateFuente, Ángel de laDoménech, Rafaelretirement agepension reformSpainjel:H55In this paper, we present a preliminary estimate of the financial impact of the recent reform of the Spanish pension system. After updating the projections of pension expenditure constructed in de la Fuente and Doménech (2010) for the period 2008-2060, we analyze the impact on this variable of raising the retirement age from 65 to 67 years, extending from 15 to 25 years the period over which wages are averaged to calculate the starting pension and increasing from 35 to 37 the number of contribution years required to obtain a 'full pension.' Conditional on a series of assumptions about the evolution of employment, productivity and demographics, our estimates suggest that these measures will reduce pension expenditure by up to 1.4 percentage points of GDP once the reforms have been fully implemented in 2027, thereby stabilizing pension expenditure at a bit over 9% of GDP during the transition period and preventing the emergence of a structural deficit in the system before the end of the next decade. On the other hand, the existing uncertainty about the future evolution of the relevant variables suggests that it would be desirable to bring forward in time the introduction of the periodic evaluation of the system (the so-called sustainability factor) so as to have in place a mechanism that can be used to modulate the rhythm and scope of the reform if the system's financial situation requires it before the end of the transitional period. Copyright © 2012 Cambridge University Press.We gratefully acknowledge financial support from BBVA Research and from the Spanish Ministry of Science and Innovation through projects ECO2011-28348 and ECO2011-29050Peer ReviewedCambridge University Press2015201520122015info:eu-repo/semantics/articlehttp://purl.org/coar/resource_type/c_6501Postprintinfo:eu-repo/semantics/acceptedVersionhttp://hdl.handle.net/10261/113522reponame:DIGITAL.CSIC. Repositorio Institucional del CSICinstname:Consejo Superior de Investigaciones Científicas (CSIC)Ingléshttp://dx.doi.org/10.1017/S1474747212000182info:eu-repo/semantics/openAccessoai:digital.csic.es:10261/1135222026-05-22T06:33:51Z
dc.title.none.fl_str_mv The financial impact of Spanish pension reform: A quick estimate
title The financial impact of Spanish pension reform: A quick estimate
spellingShingle The financial impact of Spanish pension reform: A quick estimate
Fuente, Ángel de la
retirement age
pension reform
Spain
jel:H55
title_short The financial impact of Spanish pension reform: A quick estimate
title_full The financial impact of Spanish pension reform: A quick estimate
title_fullStr The financial impact of Spanish pension reform: A quick estimate
title_full_unstemmed The financial impact of Spanish pension reform: A quick estimate
title_sort The financial impact of Spanish pension reform: A quick estimate
dc.creator.none.fl_str_mv Fuente, Ángel de la
Doménech, Rafael
author Fuente, Ángel de la
author_facet Fuente, Ángel de la
Doménech, Rafael
author_role author
author2 Doménech, Rafael
author2_role author
dc.subject.none.fl_str_mv retirement age
pension reform
Spain
jel:H55
topic retirement age
pension reform
Spain
jel:H55
description In this paper, we present a preliminary estimate of the financial impact of the recent reform of the Spanish pension system. After updating the projections of pension expenditure constructed in de la Fuente and Doménech (2010) for the period 2008-2060, we analyze the impact on this variable of raising the retirement age from 65 to 67 years, extending from 15 to 25 years the period over which wages are averaged to calculate the starting pension and increasing from 35 to 37 the number of contribution years required to obtain a 'full pension.' Conditional on a series of assumptions about the evolution of employment, productivity and demographics, our estimates suggest that these measures will reduce pension expenditure by up to 1.4 percentage points of GDP once the reforms have been fully implemented in 2027, thereby stabilizing pension expenditure at a bit over 9% of GDP during the transition period and preventing the emergence of a structural deficit in the system before the end of the next decade. On the other hand, the existing uncertainty about the future evolution of the relevant variables suggests that it would be desirable to bring forward in time the introduction of the periodic evaluation of the system (the so-called sustainability factor) so as to have in place a mechanism that can be used to modulate the rhythm and scope of the reform if the system's financial situation requires it before the end of the transitional period. Copyright © 2012 Cambridge University Press.
publishDate 2012
dc.date.none.fl_str_mv 2012
2015
2015
2015
dc.type.none.fl_str_mv info:eu-repo/semantics/article
http://purl.org/coar/resource_type/c_6501
Postprint
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/10261/113522
url http://hdl.handle.net/10261/113522
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv http://dx.doi.org/10.1017/S1474747212000182
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.publisher.none.fl_str_mv Cambridge University Press
publisher.none.fl_str_mv Cambridge University Press
dc.source.none.fl_str_mv reponame:DIGITAL.CSIC. Repositorio Institucional del CSIC
instname:Consejo Superior de Investigaciones Científicas (CSIC)
instname_str Consejo Superior de Investigaciones Científicas (CSIC)
reponame_str DIGITAL.CSIC. Repositorio Institucional del CSIC
collection DIGITAL.CSIC. Repositorio Institucional del CSIC
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repository.mail.fl_str_mv
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