Sweden and Chile are two mirrors through which Spain should look at reforming its pension system. Incomplete model It needs transfers from Spain to be able to make payments to ten million retirees. Theoretical calculations formed … Part of the comprehensive changes made by the Swedish government in 1994 and the pure capitalization system created in 1981 in Chile are success stories and can provide “useful lessons” for addressing changes in pensions in our country. They are conclusions Fourth report On pensions carried out by the University of Hesperides. A work in which experts broaden the focus to put the Spanish situation in context through comparison with three models of social security, which also includes the German model, which is undergoing a complete transformation, due to the similarity with the Spanish model, although in this case it is not recommended due to the measures being implemented “They will only increase the current deficit in the system.”
Report on “Comparative pension systems: what can Spain learn from Germany, Sweden and Chile?” It highlights the increasing financial pressures experienced by our country’s pensioners that are gradually moving into the political sphere, “a place where the compact of intergenerational income distribution is being called into question.” Therefore, experts suggest looking at “other areas to look for alternative solutions taken by other countries to ensure the sustainability and adequacy of their pension systems.”
They remember that Germany is immersed in a reform process that is working to generate some kind of change Strong social debate. The main changes being implemented in the country were “stabilization of the pension level with the development of the average German salary”, as well as an increase in social contributions, As happened in our country. A public investment fund was also created, the returns of which cover part of the cost of retirement, and assets were accumulated from an early age to maintain income in old age. However, the model is not convincing because it implies an increase in the deficit.
“Despite the efforts made, the latest measures in Germany will only increase the current deficit in the system,” which, according to the authors of the work, “calls into question this country as a reference for Spain in terms of the sustainability of the first pillar.”
Frequent example
The case of Sweden is a model often recommended by organizations and experts, such as those of Fedea. Sweden implemented a comprehensive reform in 1994 Kept the castHowever, it introduced elements of virtual capitalization and was able to ensure financial sustainability. In general, the modifications consisted of a system of virtual accounts in which each worker accumulated a Virtual balance With all your contributions in an individual account. The (default) balance is what determines how much you can accumulate in the future, along with your life expectancy.
The model is completed by applying an automated mechanism that automatically re-evaluates and adjusts the default calculations System expenses An incentive on mandatory individual savings was implemented through tax benefits in company pension plans.
Information, key
Every year, the Swedish Pension Agency sends out all known employees “On the orange color”, A personal report summarizing the accumulated balance in your individual accounts, contributions made, investment performance and an estimate of your future pension. This practice not only makes it easier for everyone to know in a clear and simple way the status of their retirement savings, but also turns the citizen into an informed actor, able to make decisions based on transparent and up-to-date data.
“The contrast with Spain is clear. “In Spain, reforms are ongoing, often reactive, and changes in calculation rules tend to be poorly understood by the average citizen,” the study says. She adds, “The result is… Feeling uncertain and distrustful The researchers conclude that Sweden demonstrates that transparency, when it becomes the norm, can enhance regime legitimacy and reduce intergenerational tensions.
Prioritize accumulated savings
The third example mentioned in the report is Chile, a country that reformed the pay-as-you-go system in 1981, implementing another system based on purely individual capitalization, where retirement income comes from accumulated savings. In this country, a compulsory private savings system has been established, where social contributions are accumulated in the individual accounts of workers. They were also created Financial agents Specialized programs aimed at investing workers’ savings and tax incentives to increase voluntary individual savings for retirement were implemented.
Chilean Solidarity Pillar
The Chilean system also has a solidarity pillar that was launched in 2008 and expanded in 2022. The so-called Universal Guaranteed Pension (PGU) is a non-contributory benefit financed by public state budgets. It covers about 90% of the population over 65 years of age (the highest income bracket is excluded), regardless of whether they have contributed or not. It is a similar benefit Pension guarantee in Sweden Or for non-shareholders in Spain.
“The Chilean model offers lower direct public spending on pensions and greater asset accumulation, with lower replacement rates,” the study says. Moreover, he explains that “the redirection of workers’ savings into the productive sector endogenously caused economic growth that would not have occurred in the absence of a funded pension system.” The Chilean system therefore constitutes “a relevant case study that could provide useful lessons for pension reform in Spain.”