Fiscal cost of 850 mln euros from pensions

The government is looking to suspend a law dating from 2010 which provides a new way of calculating main pensions, while is its also said to be planning to freeze any clauses allowing the social security system to capitalize its funds rather than distribute them.

The abolition of Law 3,863 of 2010 is, according to a plan by the new administration of the Labor Ministry, a top priority, along with the abolition of any regulations providing for the zero-deficit clause to auxiliary pensions.

Without providing for any offsetting measures that would cover the hole generated by the abolition of the law, the immediate fiscal cost of the clauses being prepared by the General Secretariat for Social Security will exceed 850 million euros per year, in expectation of a restructuring of fund allocation in the state budget.

Regarding pension fund deficits, it is likely that state funding will be maintained at last year’s levels, which would offer funds a lifeline of 1.5 billion euros, equal to their estimated deficit for this year according to their budgets.