Retire now or they will lower your pension!

Retire now or they will lower your pension!

It is beginning to be known why the minister Jose Luis Escriva he wants more contributions to pay pensions. Specifically, it has requested 0.6% more on the salary (0.4 paid by the employer and 0.2 by the worker). Also why he does not want Vice President Yolanda Díaz to be present at the pension table, nor anyone from United We Can.

The reason is clear: either it shows that pension collection is sufficient or the EU requires it to take other measures: a) raise the retirement age, so that people work more years contributing and less collecting pension; b) increase the number of years of contribution in which the pension is calculated. With this last measure, pensions tend to decrease because salaries are usually higher at the end of working life.

Neither of these two measures would be acceptable to United We Can. For this reason, Minister Escrivá does not want them to be at the negotiating table.

But this news is not neutral with respect to the volume of retirees and their pensions. Either of the two causes the future pensioner to lose money. Consequently, if he is at 66, more or less, the advice is: retire as soon as possible, lest your pension be lowered!

If the retirement age is raised (something that now seems unlikely) you will receive fewer years of pension, you will capitalize less than what you contributed. If the years of contribution are increased (from 25 to 35 is what is requested), calculate if they reduce what you are going to receive because your salaries and contributions from a long time ago would be lower. Take advantage now that conditions are safe. Avoid uncertainty.

So, depending on the laws of sociology, the solutions offered to maintain the sustainability of pensions can produce an avalanche of new retirees that destabilize the system even more.

At least 30,000 jobs will no longer be created due to the ministerial proposal to raise prices

That does not mean that Minister Escrivá is right to increase prices. Yes increases the cost of the labor factor, microeconomics says that the entrepreneur will invest more in capital and less in jobs. He also says that the service company will raise its prices to compensate and will be less competitive globally. Conclusion: unemployment will be created. The calculations indicate that at least 30,000 jobs will no longer be created due to the ministerial proposal to raise contributions. Therefore, at worst, less is collected. In addition, the CEOE is not for the job.

To do? The most sensible solution is raise the retirement age. But since this can cause an avalanche of retirees, the best thing is that for a few years it is allowed to combine collecting the pension (by 75/90%) and continuing to work contributing.

Namely, reform the “active retirement” system. Something no one thinks about. The great advantage of it is that it is voluntary on the part of the worker. Many agreements would have to be modified. But only to make the permanence in the job voluntary for those who want it.

For example, hePublic officials could extend their profession to 75. In many cases they are in full condition to carry out their work and have great experience. The teachers too. Many other professionals would. Those that require physical effort may not want to do it. But those deserve the rest.

It would be a partial solution, but since it is voluntary, it does not have to be controversial at the negotiating table. Another thing is that the EU admits it, as a bargaining chip for not applying other measures. That is a matter of negotiating in Brussels.

*** José Ramón Pin is a professor at IESE.

A man enjoys his free time on a beach.


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