Thursday, September 22, 2016

AIReF provides that the Social Security deficit to stabilize at 1.5% of GDP in five years – EntornoInteligente

The Independent Authority for Fiscal Responsibility (AIReF) provides that the deficit of the Social Security funds is set at 1.6% or 1.7% of GDP this year, with a structural misalignment between 15,000 and 17,000 million euros, and to stabilize at around 1.5% of GDP in the next five or six years.

this has been pointed out by the chair of the AIReF, José Luis Escrivá, during his participation in the forum ‘what Is a sustainable pension system?’, organized by The Confidential and Banco Sabadell, which has warned that the initial goal of the System deficit stood at 0.3% of GDP this year is going to be ‘widely overpowered”, and also the revised target of 1.1%.

Escrivá has pointed out that since the creation of the AIReF, in 2014, the agency is warning that it would divert “a lot” of the deficit targets of the System, and finally, it has gone from nearly “balance” in 2011, six years after registering a structural deficit of 17,000 million euros.


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This structural deficit has been recorded despite the fact that the direct contribution of the State to the Social Security funds has increased by 4,000 million in the last two years, that reforms have been passed “important” to contain spending and that from 2015 the new law on the revaluation of pensions and the sustainability factor sets a minimum update to 0.25%.


inteven.net

The low inflation As indicated by josemaría Escrivá, the “overflow” of the System deficit to 1.5% of the GDP is explained by two-thirds (1.1 points) by the “shock” of inflation, which registered a decline of 10 points in the last four years, which has depressed the “considerable” revenues and Social Security contributions.


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the Other two tenths of the deficit is due to policies promoting employment, according to Escrivá, have reduced transiently the quotes, to the time that other two tenths is due to the depletion of the reserve fund of Social Security, which in 2012 and 2013 contributed 3,000 million euros of financial income that are converging to zero as it runs out the so-called ‘piggy bank’ of pensions.


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This factor could contribute in a tenth more in the coming years.

The deficit of between 15,000 and 17,000 million euros of the System that calculates the AIReF also contributes one or two tenths of the expenditure for Temporary Disability to have been “fired” in the last two years.


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“it is likely that in the next five or six years to stabilize the deficit at around 1.5 points of GDP”, has predicted Escrivá, who has predicted that spending on pensions will grow in the years successive to the difficulties to increase revenue, which will make the “gap” between revenues and expenses will close “very slowly”.


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The 5% increase of Social Security income estimated by the Ministry of Employment would not be sufficient in a context of moderate inflation, according to Escrivá.
article.mercadolibre.com.see

The chair of the AIReF, has stated that Spain has a problem with the pension that is “not dramatic” in the horizon of five or seven years, but there is a deficiency of income in something more of a point of GDP.


noticias-venezuela.com
“We have obvious problems in short-term and are to be maintained in magnitude is manageable in the next five years,” he emphasized.
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yes, he warned that from 2018, date for which is expected to drain the Reserve Fund of the pension, there will be a problem “cash” and not only budget for what you think will need to be adjusted from the Social Security accounts.


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widow’s Pension and orphan’s pension In this context, Escrivá has pointed out that the transitional provision 85 of the act points to a solution that would increase contributions from the State by way of extending the non-contributory benefits (widowhood and orphanhood) via taxes, so that would no longer be funded by the Social Security.


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it looks like “the candidate logical” to the widow’s pensions and orphan’s pensions which, excluding the contribution for the minimal add-in, its cost for Social Security may exceed 20,000 million euros.
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“there is a solution”, has apostille.

In the same way, Escrivá has indicated that it would adopt further measures so that the State can obtain resources from more than one point of GDP.

Uncertainty In the long term, Escrivá has pointed out that forecasting is “more complicated” since there is a “large uncertainty” at the time of project revenue and expenses, so that has advocated for to be “humble” in the projections.

In this sense, has pointed out that there is that endogeneizar immigration flows and birth rates and the analysis of sustainability of pensions in different scenarios.

“The uncertainties are large and the society has to invest in information,” he added.

at The beginning of his speech, Escriva has stressed the importance of addressing the sustainability of the pension system assuming a 12% of GDP and 30% of public spending, in addition to that one out of every four spaniards receive a pension and is their “only source of income”.

In this line, has stated that 35 years ago the board received a Spanish was half in real terms of the perceived today, when the per capita income has increased by 65%.

“If the pension was of around 40% of the average wage, today it is near 70%,” he noted.

For his part, the deputy director of the Foundation for Applied Economics Studies (Fedea), Ignacio Conde-Ruiz, and member of International Financial Analysts (AFI), José Antonio Herce, have also warned of the inadequacy of revenues of the system.

Conde-Ruiz has opted for adjusting pensions in function of the hope back keeping contributividad, while Herce has shown to be favorable to an increase in the age of jubiilación beyond the age of 65, ruling that this could produce an increase in unemployment.

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Tags: Spain

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