The Toledo Pact and pension policy: spending cuts, contributivity and financing

Abstract

The 2020 Toledo Pact Recommendations have three objectives, the analysis of which requires supplementing them with government proposals related to the requirements of the European Commission in the context of Recovery Funds. The first is to contain or reduce the relative spending of pensions in relation to GDP; for this, parametric elements of the 2011 reform are maintained and some are expected to be intensified, such as increases in the period for calculating pensions and the greater penalty for early retirement. The second is the outsourcing of the redistributive elements of what is classified as the "contributory system" by financing it with taxation. The third is the promotion of private pensions. The maintenance and improvement of pensions requires, on the one hand, State reimbursement of the cost of benefits that were assumed by the social security fund and that, according to the legislation in force, should have been assumed by it; and on the other, of the increase in the collection of social contributions.