SPAIN - The Spanish government is considering using the Social Security Reserve Fund to invest in regional public debt at a time when the Senate has just approved the pension reform.
While Spain's senate approved the government's proposed pension reform this afternoon, the government has also mooted the idea of using the reserve fund to invest in regional bonds.
The initiative would help several indebted Spanish autonomous communities, which have accumulated around €155bn of debt in 2010, equivalent to 10.9% of GDP.
The €67bn social security reserve fund - which aims to meet the future needs of contributory benefits - currently invests 90% in public debt, with as much as 80% dedicated to Spanish national debt.
The percentage allocated to regional debt has not been disclosed yet.
This afternoon, the senate approved the pension reform, which aims to push back the legal retirement age to 67 years instead of the current 65 years and to extend the length for contributions to 37 years in total.
The new legal retirement age will be implemented from 2013 and will increase progressively over the years.
Under the new law, Spanish workers will also have to work for at least 37 years to get 100% of their pension benefit and will be entitled to take an early retirement at 63 years only.
In addition, the law on the pension system allows people with disabilities to retire in advance with a minimum of 25 years of contributions.
Last month, Spain's Chamber of Deputies approved the pensions reform bill after several months of debate since its introduction in January.
Like other European countries, Spain is currently facing a demographic as well as an ageing population problem, leading to important deficits in its pension system.
No comments yet