Aliança Catalana opens a Pandora's box with its proposal to privatize pensions

BarcelonaIn a recent interview on a public television station in Tarragona, Sílvia Orriols, leader of Aliança Catalana, advocated for a profound reform of the current pension system. The alternative system championed by the far-right party proposes that workers receive their social security contributions directly. In other words, the pension fund would not be replenished by workers' contributions. Under this model, upon reaching retirement, the State would contribute a minimum amount to citizens, who would then have to supplement their pensions with private plans—those who have taken them out. Orriols criticized the "enormous" amount of money that "the State seizes from workers." According to the Aliança leader, this would allow citizens to "save much more." She had already floated this proposal in the Catalan Parliament a few weeks prior. In the Catalan chamber, the Aliança leader labeled the public pension system a "pyramid scheme of biblical proportions." According to the pro-independence leader, the model is "unsustainable" because it relies on contributions from active workers to pay the pensions of current retirees. And the arrival of immigrants, she emphasized, does not solve the structural problem. "Some naive people believed that immigration was the solution to an absurdity," she stated, asserting that "most immigrants not only do not contribute, nor will they contribute, anything to the public pension system, but they are also and will be beneficiaries of aid and benefits," without supporting this assertion with any data. "They will have free access to healthcare, education, public housing, and social services without having contributed to their maintenance or expansion, and this causes overcrowding, collapses, and a progressive degradation of public services," she continued.

Given the uproar her words generated, in a message on her X account, Orriols backtracked and said that she advocates reforming pensions, not eliminating them, following the Swiss model. "With the current formula, those of us who are paying in now will never get paid," he snapped, lashing out at the media. However, in an interview last weekend on RNE, he again called the current system a "pyramid scheme."

Interestingly, this expression used by Alianza to define the pension system is identical to that used by Vox. Santiago Abascal's party also referred to a "pyramid scheme" in its economic program for the 2019 elections, which was coordinated by the ultraliberal economist Rubén Manso. It's an expression they continue to use today, and they are the only party at the national level that advocates for abolishing the current system. "The current model is moving in a direction that makes it unsustainable. This problem was already identified in 1995, when the so-called Toledo Pact was established. However, the politicians of the two-party system have decided to continue down a path that leads to the unsustainability of the system, to an eventual collapse of pensions, and to a potential reduction in the birth rate," stated their latest electoral program. The only difference with Aliança is that Abascal's party looks to Sweden, not Switzerland. Thus, all personal savings earmarked for retirement would be exempt from taxation, without quantitative limits and conditional upon their withdrawal after retirement.

The Austrian backpack

Ciudadanos also opened the debate, at its peak, presenting the Austrian-style severance pay system as one of the flagship measures of its electoral program. This model consists of a monthly contribution from employers of a percentage of the employee's gross salary, which is then used to create a savings account in the employee's name. In the event of dismissal, as well as retirement, the employee can access these funds, which are their own and serve as severance pay. This model was also put forward in the last election campaign by the PP candidate, Alberto Núñez Feijóo, as it had already been proposed by José Luis Rodríguez Zapatero and Pedro Sánchez himself, but the latter, with his coalition government with Podemos, abandoned the idea. Currently, 11.7% of the gross domestic product is allocated to these benefits within the context of a profound reform implemented by the Spanish government. This reform has increased contributions to provide extra resources to the pension fund, extended the calculation period, and simultaneously linked pension increases to the Consumer Price Index (CPI). Regarding the Catalan political forces, they all support the current system, but demand some modifications, all aimed at increasing, not reducing, pensions. Together, they do not propose eliminating the model or any radical changes, but rather reviewing the revaluation process to ensure it takes into account the real cost of living in Catalonia. The Republican Left of Catalonia (ERC) also advocates a review to make the model more flexible and adaptable, but not to eliminate it. In this respect, the Republicans support changing the pension calculation system so that pensioners can choose their fifteen best years of contributions. The Comuns are in favor of a review to make the system fairer and more redistributive so that it doesn't penalize women, and of raising the minimum pension. Similarly, the CUP is in favor of raising the minimum pension.