Alone with our pension worries
In order to better understand our country’s pension problem, let’s take a specific example. Let’s assume that an employee takes home 1,000 euros per month, which would mean that his gross salary is 1,274 euros. In such a case, together with his employer’s contribution, he is putting 330 euros aside for his pension. Over the course of 35 years of work, he will build up around 162,000 euros. Life expectancy in this country stands at just under 80 years of age. So, depending on whether this hypothetical employee retires at 60, 65 or 67 he will have to spread out his pension more or less evenly over the last years of his life. If he lives for another 20 years after retiring, his monthly pension would be just 580 euros; if he lives another 15 years, he would get 772 euros a month, and if he lives only 13 years more he would receive nearly 900 euros a month. To get more than this, his personal pension would need a significant cash injection from some other source, which is not a viable option in most people’s cases. It is only logical that pensions will be low in a country with low salaries. And clearly the solution does not lie in the state taking money from its budget to boost pensions. After all, whatever is taken from there will have to be recouped from taxpayers in some way or another. In practice, of course, this is precisely what has been done during the past few years. And this trend is increasing as a growing number of people choose to work in jobs which do not tax their income (such as the construction sector). Meanwhile, many employers favor prospective employees who do not insist on the payment of their social security contributions. Of course it is true that many goods and services would be a lot more expensive than they are today if all employers were taxed as they should be; but this is another very complex issue. At all events, the way things now stand, many workers are reaching retirement with an extremely small number of insurance stamps; and many often end up living below the poverty line. All political parties have pledged not to increase the maximum retirement age (currently 65 years of age) nor to boost social security contributions, as such measures would be disastrous for the competitiveness of the national economy. In view of all these factors, the only clear solution to the problem is the creation of an additional «pool» of pension capital – which in effect can only mean a private pension. Realistically, only citizens with higher salaries could afford such a luxury. Nevertheless, this is what is likely to happen. The state will guarantee a «minimum pension» and from there on we will have to muddle by on our own.
