Sunday, September 25

Feijóo incites the fear of retirees due to the rise in pensions despite the fact that Brussels has already endorsed the rise with the CPI


The Government has reiterated over and over again that pensions will rise according to the CPI next year, even if it is marked by an inflationary scenario, complying with the new mechanism approved by law after reaching an agreement with the social agents. However, the leader of the PP has cast doubt on this in a recent interview, in which he refers to a cap to increase national spending “of 3%” agreed between the Executive and the European Commission. A ceiling that does not appear in the official documents nor does the Popular Party explain it. Brussels has also already given the green light to that specific point of the pension reform, the annual rise according to prices, last June.

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Asked if pensions should rise according to prices, the PP leader did not reveal the party’s position, but he did question the measure. “At the moment, what we know is that the Government cannot increase current spending by more than 3% due to a pact it has with the EU to obtain European funds,” Feijóo stated in La Razón. The Executive reacted quickly by denying this supposed ceiling through the Minister of Social Security, José Luis Escrivá, who recalled that Spanish legislation “excludes Social Security from the spending rule.”

No sign of Feijóo’s 3% cap

In the European documents on the Recovery Plan there is no mention of this agreed figure that the leader of the PP warns about, although the European Commission recommends Spain (as well as other countries such as France and Italy) “to guarantee a prudent fiscal policy, in in particular by limiting the growth of domestically financed current expenditure below the growth of potential output in the medium term”.

From the Executive they recall that Social Security is excluded from the spending rules, according to article 12 of the Organic Law on Budgetary Stability and Financial Sustainability, as Minister Escrivá warned.

In any case, GDP growth – that potential product mentioned by the Commission in its spending recommendation – does not coincide with the 3% mentioned by Feijóo either. Yes, it does so with the 3% limit on the deficit that he had set before the pandemic, but whose compliance Brussels suspended with the pandemic and has not yet recovered. The Government intends to meet this figure in 2025. However, these are two different economic issues.

In the PP they have not wanted to explain the statement made by Feijóo. elDiario.es has asked the team of the president of the PP to which agreement with the EU he refers, but from Genoa they limit themselves to repeating Feijóo’s words about that 3%: “It is the current spending ceiling.”

Brussels has already given the green light to the rise with the CPI

Beyond the Government’s denial of this spending cap that Feijóo mentions, the European Commission has already endorsed the annual revaluation of pensions according to prices in one of its reviews of compliance with the reforms of the Recovery Plan for the pandemic. Specifically, the one that was worth a disbursement of 12,000 million euros for Spain in July, the second tranche of European funds.

The rise according to the CPI is one of the nine major changes in the pension and Social Security system that the Government sent to Brussels within the European recovery plan for COVID and that have become ‘milestones’. Specifically, in the milestone 407on which the European Commission itself reports a “revaluation mechanism that links pensions to inflation, to guarantee the purchasing power of pensioners permanently” and which is accompanied by another measure, the delay of the effective age of retirement (so that it is closer to the legal one) through incentives.

Both measures had to be approved in the fourth quarter of 2021, a date that was fulfilled in extremis, with the support of the first block of the pension reform in the Senate last December. This is what the European Commission has evaluated so far in terms of pensions, according to the schedule set with Spain, and which has been approved for the authorization of the second tranche of European aid.

In any case, this has not been the final exam on pensions of the Community Executive. There are still other measures that are pending analysis in Brussels (including approval by Spain) and some do raise doubts in Brussels. It is not about the increase according to the CPI, but about the intergenerational equity mechanism (MEI), on which the numbers of the Government and the Commission do not coincide and that Minister José Luis Escrivá has recognized that it is being studied.

This general analysis of Brussels on pensions will be completed in 2023, after the approval of the last block of changes, they remember in Social Security, and it will be the one that determines – with other measures and milestones – compliance for the disbursement of the fourth tranche of European aid .



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