Social Security places spending on pensions at 14% of GDP until 2050

MadridSocial Security has taken a step forward to avoid relying on external reports when diagnosing the pension system and has just launched a new tool that allows it to make projections of both expenditure and income in the system in almost real time. The objective is to observe whether or not it is sustainable.

"It was incomprehensible that, having one of the most powerful and useful databases in [public] administration, we did not have our own tool," defended the Minister of Social Security, Elma Saiz, this Thursday during the presentation of the new model. One of the main differences between the new tool, named INTegraSS, and the calculations made by organizations such as the Fiscal Authority (Airef) or the Bank of Spain is that the ministry will not use samples (worked databases), but the universe of the State's pensioner population.

The importance of supervising the pension system lies in the challenges it must face in the medium and long term and which strain expenditure – it should be remembered that Social Security accounts for a relevant part of public resources –, which is always under the watchful eye of Brussels, which in turn makes its own projections. An aging population and the retirement of the baby boom generation, the largest, in the coming years pose a challenge for the system that awakens specters: will pensions be payable?, will the system be equitable or will it mean too high a bill for future generations?

After the presentation of the new tool, the Spanish government maintains its optimism regarding the answers to both questions. Social Security is clinging to the reforms of 2021 and 2022, but also to the evolution of macroeconomic and demographic data (the population will grow much more than predicted due to the arrival of foreigners), to reaffirm the sustainability of the system. Using the new tool, the ministry places net average pension expenditure at 14% of GDP during the period 2022-2050, the year of maximum strain. From then on, it would begin to decline. This is a much more moderate projection compared to those drawn up by other organizations. The Fiscal Authority, for example, places it at 14.4% of GDP and the European Commission at 14.6% of GDP.

The last major pension reform must undergo an examination by Airef every three years. The first was in the spring of 2025 and the conclusion drawn from it was that the changes complied with the "spending rule" of the pension system but that sustainability "did not improve," according to the organization. To justify this, Airef focuses on the growth of money spent to cover benefits, especially retirement pensions, which represent the bulk of the spending.