SPAIN – Ratings agency Moody’s Investors Services says demographic change will present Spain with pension liabilities that “must be taken into account”.

"The continuing decline in the working age population, together with an increase in the old-age dependency ratio, will lead to growing future pension liabilities that must be taken into account,” says Moody’s senior analyst Alexander Kockerbeck in report on Spain’s credit health.

“There are further age-related expenditures that will increasingly weigh on budgets, such as healthcare costs," Kockerbeck said.

The agency called for stronger competition, inflation control and higher labour market efficiency to enable Spain to reduce regional disparities and to keep alive a “virtuous circle of wage restraint, solid GDP and employment growth and fiscal consolidation”.

“Important challenges remain, and the government has only started to address these in order to guarantee sustainable development of public finances in the long run," Kockerbeck said.

Moody’s gives Spain an Aaa rating with a stable outlook, due to an improvement in its fiscal position within the European
Monetary Union – alongside budgetary changes.

The comments come as the assets under management at Spanish occupational pension schemes are surging. Figures released by Inverco, the Spanish association of institutional investors and pension funds, show that they rose 12.31% to 21.15 billion euros at the end of 2002. And the number of occupational pension account holders rose 12.76%.

A recent survey by savings bank La Caixa found that pensions are the main worry for 60% of Spanish people over 65 years old.

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