Congress gives the green light to the pension reform that links the revaluation to the CPI

Finally, and after five years since the Toledo Pact received the mandate to make recommendations for the reform of the public pension system, Congress gave the green light on Thursday afternoon to the first package of measures that will make up the reform and that will enter effective as of January 1, 2022. Among the main issues substantiated in this vote are: the link between pensions and the CPI, the modification of coefficients for early retirement and the increase of incentives for late retirement, in addition to the separation of sources of financing from the System and the repeal of the sustainability factor for its replacement by the intergenerational equity mechanism.

Thus, the Plenary of Congress approved this Thursday by 176 votes in favor, 148 against and 6 abstentions the opinion of the bill to guarantee the purchasing power of pensions and other measures to reinforce the financial and social sustainability of the public pension system received the green light by the Plenary of Congress. The CUP, the BNG and the PP transferred their vote against.

The Minister of Inclusion, Social Security and Migration, José Luis Escrivá, intervened to thank the groups for a law that “brings security” to pensioners and a stable framework. “It guarantees once and for all the purchasing power of pensions, leaves behind a stage of uncertainty,” said Escrivá, who stressed that the package of measures has “the spirit of consensus” for responding to part of the recommendations of the Toledo Pact. He transferred the groups “outstretched hand” and invited them to “get involved” in the proceedings in the Senate and in the second part of the reform which must agree on the new contribution system for the self-employed, promote pension plans or create a new Social Security Agency.

This bill returns to the revaluation of pensions with the CPI and thus repeals the pension revaluation index (IRP) of the 2013 reform, and does not discount in years of negative inflation. It also incorporates the equity mechanism in the fourth additional provision, agreed only with the unions, without the employer, which contemplates an increase in social contributions of 0.6 points between 2023 and 2032, to be distributed by 0.5 points for companies and 0.1 for workers, to provide the Reserve Fund with resources to face the increase in spending on pensions.

Joint amendments by Bildu and ERC were incorporated in committee whereby the Government must bring to the social dialogue table within a maximum period of one year a proposal to reform the amount of minimum pensions and “the evolution of the SMI”.