Spain accepts need to extend pensionable age beyond 65

El Pais December 4th 2009

Spain is considering following the path of other European countries by raising the legal pension age, now set at 65 years, in response to the increased strain on state finances posed by a jump in life expectancy, EconomyMinister Elena Salgado said Thursday.

In an interview with public television broadcaster TVE, the minister noted that while the average effective retirement age in Spain is high at 63.6 years, life expectancy levels are also among the highest in the world. “Given that life expectancy has increased, it is reasonable that working life should also increase,” she said. Salgado did not say what the new retirement age should be, but cited the example of the Netherlands where it has now been set at 67. She insisted any changes should be phased in. “We haven’t set an age limit because we believe this has to be very gradual.”

While a wave of immigration has helped underpin the pension system in Spain, both the Bank of Spain and the European Commission have urged the government to introduce reforms to ensure the long-term viability of the system and the sustainability of government finances. According to the Spanish Social Security system, the state pension fund will be able to meet all of its obligations with out injections of state funding until 2009 and without touching its reserve fund of some €60 billion until 2033. Salgado said the Toledo Pact, a cross-party forum set up to ensure the future of the public retirement system, would shortly
submit proposed changes to current pension arrangements.

The minister said the government would also crack down on the use of early retirement schemes, which put a drain on state finances.

EL PAÍS, Madrid

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