The Pensions Law has come into force in August 1997, following its enactment by Parliament. The value of the state retirement pension will fall because the amount paid for the same number of years of contribution has been reduced, and early retirement will be penalised.
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The Pensions Law has come into force in August 1997, following its enactment by Parliament. The value of the state retirement pension will fall because the amount paid for the same number of years of contribution has been reduced, and early retirement will be penalised.
The Law of Rationalisation of the Social Security System, which contains the pensions reform, came into force in August 1997. It was passed by the majority of parliamentary groups, with the exception of the Galician Nationalist Block and a section of Izquierda Unida. Its provisions had been previously agreed with the majority trade unions, Comisiones Obreras (CC.OO) and Unión General de Trabajadores (UGT).
Under the new law, the general requirement for receiving a state retirement pension remains 15 years' contributions at work, as before. In the context of high temporary employment in the Spanish labour market, a reduction might have been desirable, because it will be difficult for many to achieve the complete 15 years. Retirement age is still 65 years.
However, there have also been substantial changes. The retirement pension provided by the public system will be up to 10% lower than before, and the rates will be reduced at all levels of contribution. For the minimum rate, for example, the pension has been reduced from 60% to 50% of the base income. Furthermore, although this year the amount payable is still calculated on the basis of the last nine years of contribution, one more year will be added in each subsequent year to reach a maximum of 15. In other words, pensions will eventually be calculated on the basis of the last 15 years of working life, when employment may be hard to find or when income and contributions are lower. On the other hand, the amounts payable will be adjusted upwards or downwards in line with the retail prices index (RPI). This has led to the first dispute over the new system, since the RPI this year will be below the rate applied to pensioners, so at the end of the year the excess will be charged to them.
Early retirement will be penalised. For each year of early retirement, the pension will be reduced by 10% but if retirement is compulsory - that is, as the result of redundancy - it will be reduced by 8%. There will be no access to invalidity pensions at the age of 65, and invalidity pensions and retirement pensions will be incompatible, since at the age of 65 the disabled person will automatically receive the latter.
In conclusion, the new law indicates a tendency towards reducing pensions and increasing their cost for workers. The reform has failed to bring Spanish pensions closer to the European average, and both in the minimum number of years required for eligibility to receive a pension (higher) and the basis for payments (lower), Spain still forms a group with Greece, Italy and Portugal at the lower end of the spectrum.
Eurofound doporučuje citovat tuto publikaci následujícím způsobem.
Eurofound (1997), Pensions reform takes effect, article.
