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	Social Pacts in Europe Introductory Page Finland Ireland Italy Netherlands Portugal Slovenia Spain

COUNTRY: Spain

TITLE OF THE PACT: Agreement for the improvement and development of the social security system  (Acuerdo para la mejora y el desarollo del Sistema de Protección Social)

PERIOD: April 2001-2004

SIGNATORY PARTIES: Government, employers’ organisations (CEOE and its small and medium enterprise affiliate, CEPYME) and one workers’ organisation (CC.OO.)

GOALS OF THE PACT: Overhauling pensions in Spain. Encourage people to work beyond age 65, to discourage early retirement and to provide incentives for private provision.

BACKGROUND:

• Spain’s population is aging, thus threatening the public pension system. In addition to this public provision, there are a small number of voluntary private schemes in operation.
• As of June 2001, state spending on pensions in Spain was 9.98% of GDP.
• The basis of the reform is contained in the so-called Toledo Pact, signed by the government and trade unions in 1994. It contained a total of 15 provisions and recommendation concerning the consolidation and rationalization of the public social security system.
• On 9 October 1996, an agreement on the financing and structure of the state social security and pensions systems was concluded by the government and the trade union confederations CCOO and UGT. The employers’ confederation CEOE refused to sign the deal. It focused on issues such as increasing social security contributions, raising the number of contribution years for the calculation of a state pension from 8 to 15 and provisions to discourage early retirement.
• This new agreement (April 2001) is a follow-up pact that would build on the achievements of the 1996 agreement.

MATTERS AGREED:

• Although the official retirement age of 65 is maintained, the government states that it will introduce legislation to make it possible for people to continue working after the age of 65, combining the receipt of a pension with employment.
• Those over 65 who have at least 35 years of social security contributions and who continue to work will not be obliged to pay social security contribution on their earnings.
• Social security contributions for workers over 55 will be reduced if they have at least five years’service with their employer. The reduction will become greater with age.
• Workers will be able to retire at 61 only if they have made more than 30 years of contribution into social security funds and have been unemployed for at least six months.
• Introduction of a new scale for calculating the reduction in the level of pension received in the case of early retirement that will benefit those who retire between the ages of 60 and 65.
• Workers suffering a disability as a result of a work-related accident or illness and who are at least 65 will be able to claim an incapacity pension in addition to a state pension.
• There is no change for the calculation method for pensions but the reference period relating to the earnings used for calculation is altered.
• In order to encourage employers to hire and retain women and older workers, a number of incentives are to be put into place that build existing financial aid (ex: employer social security contributions for women returners following maternity leave will be waived for a period of up to one year).
• Survivors pension will be increased.
• Bring special social security regimes into the basic general system. The various special regime will be simplified and in some cases, merged.
• In order to guard against falls in contribution revenue due to a decreasing workforce, the agreement provides for the setting up of a pension reserve fund to hold the surplus from social security funds.
• Separation of the sources of social security funding. Up until 2001, almost all benefits have been financed by social security contributions. Under the agreement, non-contributory benefits and health benefits will be financed by the state. This means that all social security contributions paid by employers and employees will finance contributory benefits only; minimum benefits, such as minimum pensions, will be financed out of taxation.
• Incentives for private provisions.

IMPACT:

• The UGT workers’ confederation refused to endorse the new agreement, thus ending 13 years of trade union unity on this issue. It believes that the new agreement will be to the financial detriment of the social security system. The CCOO workers’ confederation and the government have welcomed the agreement. The central employers’organization CEOE, which did not sign the 1996 accord has welcomed this new agreement.
• The accord will form the basis of new legislation in the coming months.

FOLLOW-UP AND MONITORING SYSTEMS:

• Setting up of a tripartite commission to monitor the implementation of the provisions and to continue dialogue with the government and social bodies in order to guarantee the stability and future viability of the Spanish model of social protection.

BIBLIOGRAPHY:

“New pensions agreement”in European Industrial Relations Review, June 2001, No 329

“Pact aims to restructure pensions”in European Industrial Relations Review, January 1997, No 276

Full text of agreement