Sanchez gives a cushion of 580 million to pensioners in election year

Source: The World

The Government seeks the support of 10 million pensioners in the election year by revaluing pay at least four tenths above inflation

The electoral year will mean a year lost in the reduction of the deficit in public accounts and a profit exercise for millions of pensioners, who already have the Government guarantee that, regardless of the closing of inflation in 2019, the revaluation of its performance not only equals the general rise in prices but exceeds it widely.

The maintenance of this commitment with the group of pensioners has a cost of around 580 million euros on the main item of expenditure of the State: pensions, with more than 144,000 million euros. And it has its justification in the commitment of the Prime Minister to grant pensions a revaluation of 1.6% regardless of the progress of the whole economy or tax commitments.

Thus, it happens that when it is a revaluation higher than estimated for prices, pensioners can take for granted that when the election year ends they will gain purchasing power. The Bank of Spain advanced on Tuesday its diagnosis on the progress of the economy, establishing an inflation forecast of 1.2% for the current year. The data is in line with the progress made by foundations and study centers such as Funcas or BBVA Reserach, which expect average inflation of between 1.1% and 1.3%, and which show a significant drop from the average figure of 1.7% in which 2018 was closed.

In this way, the difference of four tenths between the estimate of the regulator and the 1.6% with which the Government will prioritize pensions will represent the second time that the Executive ignores the 2013 decree, which limits the revaluation of benefits at 0.25% while Social Security presents a deficit situation.

The 580 million euros that Sanchez will add to the expense for a revaluation in pensions according to the general purchasing power will be consolidated for future years, so that the deviation of four tenths of 2019 will be accumulated in the Social Security rights of the current and new ones beneficiaries.

Sánchez hopes to satisfy the demands of the group that has conquered the most concessions to the State based on mobilizations in the last year and a half. If compared to the 0.25% ceiling set by the previous Executive in 2013, the rises of 2018 (1.7%) and 2019 (1.6%) will result in a total cost of 3.2 billion, according to the BBVAResearch estimates. .

But the reality is that, beyond the year in which three electoral processes will be concentrated in just two months, the financial problem of the system will remain there, with the amount of the annual revaluation of about 10 million benefits as one of its issues. politically more thorny.

In April 2018 the former Minister Montoro presented the «most social Budgets in history», which were «designed for pensioners» with increases for minimum pensions and widowhood, aimed at placating the group. Eight months later, already from the new socialist government, Magdalena Valerio, Minister of Labor, pointed out that there is no party capable of facing only one force in the street of 10 million votes.

On those same dates, the Secretary of State for Social Security, Octavio Granado, announced a proposal to social agents so that pensions would be reviewed each year with an indicator linked to an interannual CPI average of the last 12 months.

This mechanism, which would officially replace the current pension revaluation index from 2020 by which they rise by 0.25% while Social Security has a deficit, would make pensions rise according to the CPI for the whole year, instead of the traditional method that takes a specific month.