The future of pensions is one of the great challenges facing the Spanish economy. In a country with an increasingly aging population and rising life expectancy, maintaining a sustainable public pension system has become a priority issue for the Government and Social Security.
Over the last few years, different measures have been adopted to guarantee the viability of the system. One of the most significant has been the progressive increase in the retirement age, following the trend in other European countries. Denmark, for example, will raise the legal retirement age to 70 in 2040, in an attempt to balance public spending and demographic aging.
In this context, the economist and professor at the University of Barcelona, Gonzalo Bernardos, offered his views on the debate that most worries workers: are Spanish public pensions sufficient or even excessive?
“One gets paid based on what one has previously quoted.”
In a recent video for Consumidor Global, Bernardos addressed this question directly, providing an answer that has sparked debate on social networks.
“The pension system depends on two essential variables: the amount contributed and the number of years contributed. You get paid according to what you have previously contributed,” explained the Catalan economist, who also stressed the importance of determining whether the Administration puts in additional money to sustain the system.
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According to Bernardos, the analysis of the data shows a surprising reality: Spain ranks second in the OECD (behind only Greece) in which retirees receive a higher pension in relation to their last salary.
“In net terms, the replacement rate of Spanish pensions corresponds to 83% of the last salary,” detailed the professor of the University of Barcelona.
Spanish pensions, among the most “generous” in Europe
For Bernardos, the figures are clear: the Spanish system offers higher pensions than the European average, especially when compared with countries such as Germany, France or the Netherlands, where the ratio to the last salary is significantly lower.
“Spain is a country where, at age 65, the average life expectancy is 21 years,” the economist recalled. “However, various studies show that what retirees have paid throughout their working lives is only enough to cover between 11 and 13 years of pension.”
From this comparison, Bernardos concludes that pensions in Spain are generous, since the public system guarantees coverage far in excess of what could be financed exclusively by workers’ contributions.
“Spanish public pensions are higher than those of the Germans.”
The economist went further and directly compared the Spanish situation with the German one. “Although salaries in Spain are considerably lower than in Germany, our public pensions are higher than those of the Germans,” Bernardos assured.
As he explained, the German system has a mixed structure, where the public pension is usually smaller and workers rely more heavily on private or company plans to supplement their retirement income.
“That’s why, unfortunately, there are quite a few German retirees who have to continue working even after they retire, simply to make ends meet in dignity,” he said.
The economist closed his analysis with a strong statement: “Spanish pensions are undoubtedly generous, especially if we compare them with those of our European neighbors”.
A debate that continues in Spain
Bernardos’ statements revive a debate that has been going on in Spanish society for years: is such a generous pension system sustainable?
The constant increase in the number of pensioners, together with the drop in the birth rate and the reduction in the active population, threatens to unbalance the Social Security accounts.
For this reason, the different governments have opted for measures such as:
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The revaluation of pensions in accordance with the CPI.
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The increase in social security contributions.
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The progressive delay of the retirement age to 67 in 2027.
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And the promotion of complementary private pension plans.
However, these solutions are not always sufficient to ensure long-term equilibrium.
A system at risk, but with a high level of coverage
Bernardos himself has recognized on other occasions that the Spanish pension system, although generous, is not risk-free.
“Spain has a system that pays a lot, but which depends excessively on the contributions of active workers. If the active population decreases and retirees increase, there will be financial tensions,” the economist has warned in several interviews.
Even so, he stresses that the level of coverage of the Spanish system is a source of pride: few countries guarantee a pension so close to the last salary received.
In fact, according to the latest OECD reports, while in Spain the replacement rate is 83%, in Germany it is around 51%, in France 74% and in the United Kingdom barely 29%.
The future of pensions in an aging country
The aging of the population is the great challenge facing Social Security. With life expectancy exceeding 83 years and the birth rate at historic lows, the imbalance between contributors and pensioners is growing.
According to data from the Ministry of Inclusion, Social Security and Migration, there are almost 10 million pensioners in Spain and monthly spending on pensions now exceeds 13 billion euros.
Experts such as Bernardos believe that the solution lies in improving productivity, attracting more quality employment and promoting complementary savings, without renouncing the public model that guarantees social cohesion.
