As we have commented in previous posts, there is a Social Security deficit that we could call “systemic”. Today we will talk about how the Government intends to patch up the solution to this serious problem, which affects us today and tomorrow.
The recent Social Security deficit
In 2016, almost 20 billion euros were drawn down from the “Pension Piggy Bank”.. As they say, that one was left “shivering”, after the plundering of recent years:
- 66 billion accumulated therein in 2011
- To the less than 16 billion at the end of 2016 remaining in the Reserve Fund.
We already advanced last December, that the numbers did not work out for 2017, since at this rate of withdrawal, the balance would be exhausted before the end of the year. The Government has had to react, and now we will see how.
A loan from the Treasury to the Social Security
This would be the big headline… The Government has decided to lend money to the Social Security in order to be able to pay pensions.
In view of the existing deficit, they have preferred not to use up the small remaining balance of the Reserve Fund, but to do so by means of a loan of 10,129 million euros.
Apparently, despite the loan, a greater effort will still have to be made, given that the estimated deficit is around €16.5 billion. This difference will be assumed by the Pension Piggy Bank, which will remain at around 10,000 million.
Future prospects for Social Security
All this does not invite us to be optimistic. Furthermore, according to the information we can see in the press, the Executive is inflating the forecast for Social Security revenues. They are including in the Budget estimates of 6.8% growth in income for this fiscal year, when up to February the growth is 4%.
Young people are aware that, by their retirement age, public pensions will be much smaller than they are today. For all those who are able to do so, it would be advisable to take out a savings plan to help supplement that pension.
We work with more than twenty insurance companies, which offer better solvency than many banks. Come and ask us.
