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After Years of Crisis in Spain, Pensioners Next to Feel the Pain

Pensioners take part in a protest in favor of higher state pensions, in Bilbao, Spain, Feb. 12, 2018. PHOYO: TeleSur/Reuters

Doubts emerge as to who is saving whom.

By Don Quijones | 21 February 2018

WOLF STREET — Structural unemployment and falling wages, precarious jobs, an endless brain drain, a rapidly ageing population, and the government’s constant pilfering of the national pensions pot have all taken their toll on Spain’s social security system. As we warned last November, the country’s Social Security Reserve Fund, which was meant to serve as a nationwide nest egg to guarantee future pension payouts — given Spain’s burgeoning ranks of pensioners — has been bled virtually dry by the government.

To avoid wiping out the fund altogether in 2017, the Spanish government extended a €10.1 billion interest-free loan to Spain’s social security system, which enabled it to pay out the two extra pension payments due in June and December. That way, only about €7.5 billion would be tapped from Spain’s public pension nest egg. Emptying the pot altogether last year would have been politically unpalatable, said El País. Instead, it will be emptied this year as the social security system racks up yet another massive annual shortfall.

In 2016, the system registered its biggest deficit in its history (€18.1 billion), which was covered by the pension pot. In 2017, the deficit is estimated to be about €17 billion, according to the government. That’s roughly 1.5% of Spanish GDP. The deficit in 2018 is projected to be €18-20 billion. […]

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