The European Commission has put figures on the commitments adopted a year ago by the Government as part of the reform plan to be undertaken in the coming months, and which will be the counterpart to receive the almost 70,000 million euros of non-refundable aid under the reconstruction program to face the ravages of the pandemic. With the latest calendar already signed by the Commissioner for the Economy of the community body, Paolo Gentiloni, and the Minister of Finance, María Jesús Montero, our country will have to accelerate certain points of the pension reform in the first and second half of 2022 to be able to access most of the funds. Among them: the increase in years of contributions for the pension calculation period, the approval of the intergenerational equity mechanism, the activation of the public pension fund, the reform of the self-employed contribution system or the path of raising the maximum contribution bases.
Specifically, the latest commitment to the calendar clearly states that the Government will carry out, among other actions, the “entry into force of the legislation for the extension of the computation period for the calculation of the retirement pension. “Already at the beginning of 2021, when the Government’s commitments to Brussels were set, this measure raised dust within the Executive since in a first proposal that was later buried by the captained ministry by José Luis Escrivá, spoke of raising this period from 25 years to the last 35 years of contributions. On average, this expansion of the calculation would imply cuts in the initial pension of 8.6% for all wage earners and up to 10 % in the case of the self-employed.
Not surprisingly, the cabinet led by José Luis Escrivá, has clarified on this point that to mitigate the negative impact that the increase in the calculation period may have on new pensioners, the Government will carry out in parallel both the coverage of the so-called pricing gaps, such as assessing the option for recent retirees to choose those 35 best years from among their entire working lives.
Furthermore, this element will be negotiated as part of the second leg of the pension reform in the second half of 2022. Although, the milestones that are met for that second half of the year will be the counterpart to receive about 10,000 million euros at the beginning of 2023. By then, the agreement with the employers’ association and unions for the path of raising the maximum contribution bases must also be substantiated. A gradual stopping process for which the Government will also study at the same time a path to increase the maximum retirement pension, currently at 2,707 euros per month. All this, with the objective of not undermining the contributivity of the System.
Just before this moment, another 6 billion euros that are subject to the approval of two crucial points: the activation of the public pension fund and the reform of the contribution system for self-employed workers.
The first of the points seems already advanced in the framework of the social dialogue table. Recently, the Executive sent employers and unions a proposal to regulate the public pension fund With which it is intended to encourage the hiring of employment plans among workers in our country. In addition, the Executive’s commitment in the first contact with the community authorities about the reform components that Spain will deploy to qualify for reconstruction funds. Next Generation, was that before the end of 2021 the bill with the regulations of the new savings vehicle would have to be approved.
Here, the social agents assure that the draft of the bill must be adjusted in the coming weeks before its final approval to improve the operation proposed by Moncloa. It affirms from the employers’ and unions that the rigidity in the governance and the management costs could render the plans promoted by the public sector unattractive.
Self-employed reform
In this sense, the battle to receive the 6,000 million euros corresponding to the third quarterly payment, and that would be added to the 31,000 million received up to that moment (including the 9,000 million advanced by Brussels), will be in reaching an agreement with the entities representatives of the self-employed workers to reform the Challenge and introduce the real income quote for the collective.
Official sources assure the Economist that the conversations to develop this point are already advanced, since already before the summer the Executive transferred to the social agents a proposal with 13 tax brackets in the IRPF style of employees, and with which the Ministry of Inclusion, Security Social and Migration expects to reduce the monthly fee paid by about 2 million workers, and that on the other hand would imply an increase in payments to the Reta for another 700,000 self-employed in our country.
The self-employed can adjust their contributions at the end of each year
At this time, the Government is committed to assessing as soon as possible the new contribution model that aims to adjust the contributions of workers. One of the significant elements that the proposal will include will be the possibility to change section throughout the year, according to the forecast of net returns.
In addition, it is expected that the self-employed can make the adjustment of their contributions at the end of each year, so that if the contribution remains below the income, a settlement of pending payments, while if the contributions exceed the corresponding level, they will receive the difference or may leave it as a price improvement.
Moncloa raises the rise in contributions to pay pensions to 0.6% and charges the company 66% of the cost
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