Pension changes are under discussion in Spain

The Spanish government has started a round of meetings with unions and employers to discuss changes to the country’s pension system which it hopes will be in place by the start of 2014.

The proposals have two separate elements. The first relates to the annual uprating, where the plan is to replace the current system — where pensions are normally increased in line with inflation — with one that takes account of the impact of pension costs on overall public spending. This is to start at the beginning of 2014.

The second element deals with the level of pensions paid, where the government is proposing that the amounts paid to new pensioners should be reduced to take account of longer life expectancy. This would only start to be introduced in 2019.

The government has promised that there will be limits on the new uprating system — a minimum increase of 0.25% is to be guaranteed, while pensions will not be able to be increased by more than 0.25% above inflation.

However, both main union confederations, CCOO and UGT are deeply concerned about the proposals.

Carlos Bravo of CCOO has said that the government should not “use a deficit caused by the economic cycle to introduce structural measures”.

And Carmen López of the UGT argues that the plans will “reduce the purchasing power of pensions”.