Spain presses ahead with planned pension reforms

Spain is pushing ahead with planned pension reforms, which includes paying workers to postpone their retirement, according to reports.

However, French press agency, AFP, wrote that analysts have warned the reforms do not go far enough to help reduce the deficits in the pension system.

The country revealed earlier this month that it plans to get more people to work longer by giving cheques worth up to €12,000 per year to retirement-age workers who postpone their retirement. Retiring early on the other hand would lead to a reduction in monthly payments.

According to AFP, Spain’s Budget Minister, Maria Jesus Montero, told a news conference: "Pensioners will no longer have to worry about the evolution of their pension.”

The reform, which has been approved by the Spanish cabinet, will restore the indexation of pensions to inflation. A conservative government eliminated indexation in 2013, although in 2018 it hiked pensions in line with inflation following protests by pensioners against their loss of purchasing power.

The 2013 reform also gradually increased the legal retirement age to reach 67 in 2027 from around 65 years currently.

IE Business School head of the economics department, Rafael Pampillon, believes raising pensions in line with inflation is “outrageous”.

"The system is not sustainable. Pensions should be frozen," he told AFP.

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